Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Note 3 - Acquisitions and Divestitures

Acquisitions:

On January 31, 2023, the Company acquired the assets of American Roller Bearing Company ("ARB"), a North Carolina-based manufacturer of industrial bearings. ARB, which boasts a large U.S. installed base and strong aftermarket business, operates manufacturing facilities in Hiddenite and Morganton, North Carolina. The total purchase price for this acquisition was $32.0 million, including $0.5 million of the purchase price that was held back for the post-closing settlement of working capital. ARB generated sales of approximately $35 million in 2022 and the transaction was funded with cash on hand. Results for ARB are reported in the Engineered Bearings segment.

The following table presents the purchase price allocation at fair value for the ARB acquisition as of March 31, 2023.


	Initial Purchase Price Allocation
Assets:

Accounts receivable	$	4.7
Inventories	19.2
Other current assets	0.6
Property, plant and equipment	12.8


Other intangible assets	0.1

Total assets acquired	$	37.4
Liabilities:
Accounts payable, trade	$	2.8
Salaries, wages and benefits	0.1

Other current liabilities	3.0






Total liabilities assumed	$	5.9
Net assets acquired	$	31.5

In determining the fair value of the amounts above, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. The estimation of fair value required judgement related to future net cash flows, discount rates, competitive trends, market comparisons and other factors. Inputs were generally determined by taking into account independent appraisals and historical data, supplemented by current and anticipated market conditions.

The amounts in the table above represent the preliminary purchase price allocation for ARB. This purchase price allocation, including the residual amount allocated to goodwill or the recognition of a bargain purchase price gain, is based on preliminary information and is subject to change as additional information concerning final asset and liability valuations are obtained and management completes its reassessment of the measurement period procedures based on the results of the preliminary valuation. As of March 31, 2023, no elements of the purchase price allocation have been finalized. During the applicable measurement period, 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 has been completed on the acquisition date.

On November 4, 2022, the Company completed the acquisition of GGB Bearing Technology ("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 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. Results for GGB are reported in the Engineered Bearings segment.

On May 31, 2022, the Company completed the acquisition of Spinea, s.r.o. ("Spinea"), a European technology leader and manufacturer of highly engineered cycloidal reduction gears and actuators, with full year 2022 sales of approximately $40 million. Spinea’s solutions primarily serve high-precision automation and robotics applications in the factory automation platform. Spinea is located in Presov, Slovakia. The purchase price for this acquisition was $151.2 million, net of cash acquired of $0.2 million, subject to customary post-closing adjustments. Results for Spinea are reported in the Industrial Motion segment.

Note 3 - Acquisitions and Divestitures (continued)

The following table presents the updated purchase price allocation at fair value, net of cash acquired, for the 2022 acquisitions, as of March 31, 2023:


	Initial Purchase Price Allocation		Adjustments		Updated Purchase Price Allocation
Assets:

Accounts receivable	$	30.6	$	—	$	30.6
Inventories	52.3		(0.6)		51.7
Other current assets	7.6		—		7.6
Property, plant and equipment	153.6		(3.5)		150.1

Goodwill	106.9		(2.4)		104.5
Other intangible assets	182.6		(0.8)		181.8
Other assets	12.1		3.5		15.6
Total assets acquired	$	545.7	$	(3.8)	$	541.9
Liabilities:
Accounts payable, trade	$	16.8	$	(0.5)	$	16.3
Salaries, wages and benefits	11.8		—		11.8
Income taxes payable	3.2		—		3.2
Other current liabilities	7.0		(1.0)		6.0


Accrued pension benefits	3.2		—		3.2

Deferred income taxes	30.0		—		30.0
Other non-current liabilities	20.0		—		20.0
Total liabilities assumed	$	92.0	$	(1.5)	$	90.5
Net assets acquired	$	453.7	$	(2.3)	$	451.4

The above purchase price allocation, 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 is obtained. The purchase price allocation for Spinea is preliminary pending the continued evaluation of operating leases, which is expected to be finalized during the second quarter of 2023. The purchase price allocation for GGB is preliminary pending the continued evaluation of certain working capital accounts, real estate and other intangible assets, as well the related impacts on deferred income taxes. During the measurement period, 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.

On April 4, 2023, the Company acquired Leonardo Top S.a.r.l. ("Nadella"), a leading European manufacturer of linear guides, telescopic rails, actuators and systems and other specialized industrial motion solutions, from ICG plc. Nadella operates manufacturing facilities in Europe and China and reported revenue of approximately €100 million in 2022.

Divestitures:

On February 28, 2023, the Company completed the sale of all of its membership interests in S.E. Setco Services Company, LLC ("SE Setco"), a 50% owned joint venture. The Company had accounted for SE Setco as an equity method investment prior to the sale. The Company received $5.7 million in cash proceeds for SE Setco and recognized a pretax gain of $4.8 million on the sale. The gain was reflected in other income, net in the Consolidated Statement of Income.