Acquisitions (Notes)

9 Months Ended

Sep. 30, 2018

Business Combination Disclosure [Text Block]

Note 3 - Acquisitions and Divestitures

The Company completed three acquisitions in 2018. On September 18, 2018, the Company completed the acquisition of Rollon S.p.A. ("Rollon"), a leader in engineered linear motion products, specializing in the design and manufacture of linear guides, telescopic rails and linear actuators used in a wide range of industries such as passenger rail, aerospace, packaging and logistics, medical and automation. On September 1, 2018, the Company completed the acquisition of Apiary Investments Holdings Limited ("Cone Drive"), a leader in precision drives used in diverse markets including solar, automation, aerial platforms, and food and beverage. On August 30, 2018, the Company's majority-owned subsidiary, Timken India Limited ("Timken India"), completed the acquisition of ABC Bearings Limited ("ABC Bearings"). Timken India issued its shares as consideration for the acquisition of ABC Bearings. Refer to Note 8 - Equity for more information on the acquisition of ABC Bearings. ABC Bearings is a manufacturer of tapered, cylindrical and spherical roller bearings and slewing rings in India. Expected aggregate annual sales for these companies is approximately $270 million. The total purchase price for these acquisitions, net of cash acquired of $30.1 million, was $831.4 million. The Company incurred acquisition-related costs of $7.3 million to complete these acquisitions. The 2018 acquisitions are subject to post-closing purchase price allocation adjustments. Based on markets and customers served, substantially all of the results for Rollon and Cone Drive are reported in the Process Industries segment and substantially all of the results for ABC Bearings are reported in the Mobile Industries segment.

The following table presents the preliminary purchase price allocation at fair value related to the 2018 acquisitions at the date of acquisition:



	Preliminary Purchase Price Allocation
Assets:
Accounts receivable, net	$	43.3
Inventories, net	58.3
Other current assets	7.2
Property, plant and equipment, net	68.3
Goodwill	468.2
Other intangible assets	366.0
Other non-current assets	18.8
Total assets acquired	$	1,030.1
Liabilities:
Accounts payable, trade	$	34.5
Salaries, wages and benefits	9.2
Income taxes payable	1.6
Other current liabilities	9.2
Short-term debt	1.8
Long-term debt	1.7
Accrued pension cost	7.0
Accrued postretirement benefits cost	11.8
Deferred income taxes	113.0
Other non-current liabilities	8.9
Total liabilities assumed	$	198.7
Net assets acquired	$	831.4

The following table summarizes the preliminary purchase price allocation for identifiable intangible assets acquired in 2018:



	Preliminary Purchase Price Allocation
			Weighted - Average Life
Trade names (indefinite life)	$	47.4	Indefinite
Trade names (finite life)	1.8		15 years
Technology and know-how	127.2		17 years
Customer relationships	189.6		19 years
Total intangible assets	$	366.0

The Company completed three acquisitions in 2017. On July 3, 2017, the Company completed the acquisition of Groeneveld Group ("Groeneveld"), a leading provider of automatic lubrication solutions used in on- and off-highway applications. On May 5, 2017, the Company completed the acquisition of the assets of PT Tech, Inc. ("PT Tech"), a manufacturer of engineered clutches, brakes, hydraulic power take-off units and other torque management devices used in the mining, aggregate, wood recycling and metals industries. On April 3, 2017, the Company completed the acquisition of Torsion Control Products, Inc. ("Torsion Control Products"), a manufacturer of engineered torsional couplings used in the construction, agriculture and mining industries.

Certain measurement period adjustments were recorded in 2018, resulting in a $3.2 million reduction to Goodwill. The following table presents the purchase price allocation for the 2017 acquisitions:



	Preliminary Purchase Price Allocation		Adjustment			Purchase Price Allocation
Assets:
Accounts receivable, net	$	27.6				$	27.6
Inventories, net	29.4					29.4
Other current assets	3.3		$	2.7		6.0
Property, plant and equipment, net	31.5					31.5
Goodwill	149.7		(3.2		)	146.5
Other intangible assets	173.6					173.6
Other non-current assets	1.8					1.8
Total assets acquired	$	416.9	$	(0.5	)	$	416.4
Liabilities:
Accounts payable, trade	$	9.5				$	9.5
Salaries, wages and benefits	5.8					5.8
Other current liabilities	8.6		$	(0.1	)	8.5
Short-term debt	0.1					0.1
Long-term debt	2.9					2.9
Deferred income taxes	42.2		(0.7		)	41.5
Other non-current liabilities	1.0		0.3			1.3
Total liabilities assumed	$	70.1	$	(0.5	)	$	69.6
Net assets acquired	$	346.8	$	—		$	346.8

Divestiture:

On September 19, 2018, the Company completed the sale of Groeneveld Information Technology Holding B.V. (the "ICT Business"), located in Gorinchem, Netherlands. The Company acquired the business in July 2017 as part of the Groeneveld acquisition. The ICT Business is separate from the Groeneveld lubrications solutions business and had sales of approximately $15 million for the twelve months ended September 30, 2018.