Acquisitions

12 Months Ended

Dec. 31, 2020

Note 2 - Acquisitions

The Company completed one acquisition in 2020. On November 30, 2020, the Company completed the acquisition of the assets of Aurora. With expected 2020 annual sales of approximately $30 million, Aurora serves a diverse range of industrial sectors, including aerospace and defense, racing, off-highway equipment and packing. Aurora is headquartered in Montgomery, Illinois. The total purchase price for this acquisition was $17.8 million, including $0.5 million of the purchase price that was held back for the settlement of net working capital, subject to a post-closing net working capital adjustment. Based on markets and customers served, results for Aurora are reported in both the Mobile Industries segment and the Process Industries segment.

During 2019 the Company completed two acquisitions. On November 1, 2019, the Company completed the acquisition of BEKA, a leading global supplier of automatic lubrication systems. BEKA serves a diverse range of industrial sectors, including wind, food and beverage, rail, on- and off-highway and other process industries. Headquartered in Pegnitz, Germany, BEKA has manufacturing and research and development facilities in Germany, and assembly facilities and sales offices around the world. On April 1, 2019, the Company completed the acquisition of Diamond Chain, a leading supplier of high-performance roller chains for industrial markets. Diamond Chain serves a diverse range of market sectors, including industrial distribution, material handling, food and beverage, agriculture, construction and other process industries. Diamond Chain operates primarily in the U.S. and China.

Note 2 - Acquisitions (continued)

The purchase price allocations at fair value, net of cash acquired, for 2020 and 2019 acquisitions as of December 31, 2020 and 2019 are presented below:


	2020		2019
Assets:
Accounts receivable	$	2.7	$	26.1
Inventories	16.4		59.4
Other current assets	0.1		5.1
Property, plant and equipment	10.9		57.4
Operating lease assets	—		5.1
Goodwill	—		52.6
Other intangible assets	—		84.3
Other non-current assets	—		0.9
Total assets acquired	$	30.1	$	290.9
Liabilities:
Accounts payable, trade	$	0.8	$	10.6
Salaries, wages and benefits	—		6.8
Income taxes payable	—		2.1
Other current liabilities	0.9		7.1
Short-term debt	—		0.8
Long-term debt	—		17.2
Accrued pension cost	—		0.8
Accrued postretirement liability	—		0.1
Long-term operating lease liabilities	—		4.5
Deferred taxes	—		2.9
Other non-current liabilities	—		1.1
Total liabilities assumed	$	1.7	$	54.0
Noncontrolling interest acquired	—		1.8
Net assets acquired	$	28.4	$	235.1
Cash flow reconciling items:
Working capital adjustment related to 2018 acquisitions paid in 2019	$	—	$	2.9
Working capital adjustment for 2019 acquisitions paid (recognized) in 2020	6.7		(6.7)
Indemnification settlement received	—		(4.8)
Bargain purchase price gain	(11.1)		—
Cash paid for acquisitions, net of cash acquired	$	24.0	$	226.5

In April 2020, the Company paid $6.7 million for a working capital adjustment to the purchase price for BEKA in accordance with the purchase agreement. This adjustment, as well as other measurement period adjustments recorded in 2020, resulted in an $8.4 million increase to goodwill.

As a result of applying the accounting rules on business combinations, the Company recognized a bargain purchase gain of $11.1 million on the acquisition of Aurora. The Company believes it was able to negotiate a bargain purchase price for the business due to some historic operational performance challenges, as well as the seller’s desire to exit the business in an expedited manner in an exclusive process with the Company.

In January 2019, the Company paid a working capital adjustment of $2.9 million in connection with the Cone Drive acquisition, which was accrued and reflected in the purchase price in 2018. In May 2019, the Company received a $4.8 million payment from escrow related to an indemnification settlement for the Cone Drive acquisition, which is reflected as a purchase price adjustment. These adjustments, as well as other measurement period adjustments recorded in 2019, resulted in a $1.9 million increase to Goodwill.

Note 2 - Acquisitions (continued)

The amounts for 2020 in the table above represent the preliminary purchase price allocations for Aurora. These purchase price allocations are based on preliminary information and are subject to change as additional information concerning final asset and liability valuations is obtained. The purchase price allocation for Aurora is preliminary as a result of the proximity of the acquisition date to December 31, 2020, and as a result, no elements of the purchase price allocation have been finalized. During the measurement period for this acquisition, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date. As a result of recognizing the bargain purchase price gain, any change will be reflected as an adjustment to pretax income.

No intangible assets were acquired in 2020. The following table summarizes the purchase price allocation at fair value for identifiable intangible assets acquired in 2019:


	2019
				Weighted- Average Life
Trade names (indefinite life)		$	28.2	Indefinite

Technology and know-how		22.4		17 years
Customer relationships		33.3		19 years

Capitalized software		0.5		2 years
Total intangible assets		$	84.4

The total acquired intangible asset amount for 2019 acquisitions does not fully align with the purchase price allocations shown previously due to measurement period adjustments reflected in the purchase price allocations.