Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Note 2 - Acquisitions and Divestitures

Acquisitions:

The Company completed two acquisitions in 2022. On November 4, 2022, the Company completed the acquisition of GGB, a global technology and market leader of premium engineered metal-polymer plain bearings for $302.5 million, net of cash acquired of $19.2 million, subject to customary post-closing adjustments. GGB's revenue was estimated to be approximately $200 million for the full year 2022. GGB's products are used mainly in industrial applications, including pumps and compressors, HVAC, off-highway, energy, material handling and aerospace. With manufacturing facilities across the United States, Europe and China, GGB employs approximately 900 people and has a global engineering, distribution and sales footprint. On May 31, 2022, the Company completed the acquisition of Spinea, a European technology leader and manufacturer of highly engineered cycloidal reduction gears and actuators, with estimated 2022 full year sales of approximately $40.0 million. Spinea’s solutions primarily serve high-precision automation and robotics applications in the factory automation sector. Spinea is located in Presov, Slovakia. The purchase price for this acquisition was $151.2 million, net of cash acquired of $0.2 million. The Company incurred acquisition-related costs of $3.6 million in 2022 to complete these acquisitions. Based on markets and customers served, results for GGB are reported in the Mobile Industries and Process Industries segments, and results for Spinea are reported in the Process Industries segment.

On August 20, 2021, the Company completed the acquisition of the assets of iMS, a manufacturer of industrial robotics and automation solutions, with annual sales of approximately $6.0 million. iMS is headquartered in Norton Shores, Michigan. The purchase price for this acquisition was $7.7 million. Based on markets and customers served, results for iMS are primarily reported in the Process Industries segment.

Note 2 - Acquisitions and Divestitures (continued)

The purchase price allocations at fair value, net of cash acquired, for 2022 and 2021 acquisitions as of December 31, 2022 and 2021 are presented below:


	2022		2021
Assets:
Accounts receivable	$	30.6	$	0.2
Inventories	52.3		1.1
Other current assets	7.6		—
Property, plant and equipment	153.6		0.6

Goodwill	106.9		5.4
Other intangible assets	182.6		2.2
Other non-current assets	12.1		0.2
Total assets acquired	$	545.7	$	9.7
Liabilities:
Accounts payable, trade	$	16.8	$	0.3
Salaries, wages and benefits	11.8		—
Income taxes payable	3.2		—
Other current liabilities	7.0		1.5





Deferred income taxes	30.0		—
Other non-current liabilities	23.2		0.2
Total liabilities assumed	$	92.0	$	2.0

Net assets acquired	$	453.7	$	7.7
Cash flow reconciling items:
Working capital adjustment related to 2020 acquisitions paid in 2021	—		(0.2)


Cash paid for acquisitions, net of cash acquired	$	453.7	$	7.5

The 2022 acquisitions presented above includes goodwill of $63.6 million and intangible assets of $152.0 million for GGB, and $43.3 million of goodwill and $30.6 million of intangible assets for Spinea.

The amounts for 2022 in the table above represent the preliminary purchase price allocations for GGB and Spinea. These purchase price allocations, including the residual amount allocated to goodwill, is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations are obtained. The purchase price allocation for GGB is preliminary as a result of the proximity of the acquisition date to December 31, 2022, and as a result, no elements of the purchase price allocation has been finalized. The purchase price allocation for Spinea is preliminary with respect to certain working capital items, specifically inventory, and certain income tax adjustments. During the measurement period for each 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.

Note 2 - Acquisitions and Divestitures (continued)

The following table summarizes the preliminary purchase price allocation at fair value for identifiable intangible assets acquired in 2022 and 2021:


	2022			2021
			Weighted- Average Life			Weighted- Average Life
Trade names (indefinite life)	$	35.2	Indefinite	$	—	—
Trade names (finite life)	6.2		20 years	—		—

Technology and know-how	38.7		15 years	1.5		19 years

Customer relationships	100.2		16 years	0.5		2 years
Non-competes	—		—	0.2		5 years
Capitalized software	2.3		2 years	—		—
Total intangible assets	$	182.6		$	2.2

Divestitures:

During the third quarter of 2022, the Company made the decision to sell its ADS business, located in Manchester, Connecticut. The business met the held for sale criteria, and the Company reclassified its assets and liabilities accordingly. As a result of the carrying value of the business exceeding the estimated sales price less costs to sell, the Company recorded an impairment charge of $29.3 million. On November 1, 2022, the Company completed the divestiture of the ADS business. ADS had net sales of $39.7 million and $48.8 million in 2022 and 2021, respectively. The results of operations of ADS were reported in the Mobile Industries segment based on customers and underlying market sectors served. The Company recorded proceeds of $33.0 million on the sale of the business.

On September 1, 2022, the Company completed the divestiture of Timken Russia, one of its two subsidiaries in Russia. Timken Russia had net sales of $4.8 million and $19.6 million in 2022 and 2021, respectively. The results of operations of Timken Russia were reported in the Mobile Industries and Process Industries segments based on customers and underlying market sectors served. The Company recorded proceeds of $1.0 million, net of cash divested of $5.3 million, and recognized a loss of $2.7 million on the sale of the business. The loss was reflected in other income (expense), net in the Consolidated Statement of Income.