Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.21.2
Acquisitions
9 Months Ended
Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
ACQUISITIONS ACQUISITIONS
Coventya Acquisition
On September 1, 2021, the Company completed the Coventya Acquisition for $486 million, net of cash. Coventya is a global provider of specialty chemicals for the surface finishing industry which complements our industrial business. Coventya is included in our Industrial Solutions business line within our Industrial & Specialty segment.
HKW Acquisition
On May 5, 2021, the Company completed the HKW Acquisition for $50.9 million, net of cash. HKW specializes in conformal coatings, encapsulation resins, thermal interface materials, contact lubricants and cleaning chemistry and complements our broader electronics portfolio with many applications overlapping with our semiconductor technologies. HKW is included in our Semiconductor Solutions business line within our Electronics segment.
The following table summarizes the allocation of the purchase price of the Coventya and HKW Acquisitions (together the "Acquisitions") to the identified assets acquired and liabilities assumed at the respective acquisition dates:
  (dollars in millions) Coventya HKW
Identifiable assets acquired and liabilities assumed
Accounts receivable $ 44.6  $ 10.1 
Inventories 37.7  11.2 
Other current assets 10.9  2.4 
Property, plant and equipment 28.7  6.2 
Identifiable intangible assets 213.4  28.7 
Other assets 11.4  2.7 
Current liabilities (42.9) (21.6)
Deferred income taxes (55.5) (7.5)
Other long-term liabilities (14.7) (3.2)
Non-controlling interests (39.6) — 
Total identifiable net assets 194.0  29.0 
Goodwill 291.6  21.9 
Total purchase price $ 485.6  $ 50.9 
The excess of the cost of the Acquisitions over the net amounts assigned to the fair value of the assets acquired and the liabilities assumed was recorded as goodwill and represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. Substantially all of the goodwill recorded in connection with the Acquisitions is not expected to be deductible for tax purposes.
The fair value of the identifiable intangible assets recorded in conjunction with the Acquisitions was as follows:
Coventya HKW
  (dollars in millions) Fair Value
Weighted Average Useful Life (years)
Fair Value
Weighted Average Useful Life (years)
Customer relationships $ 145.0  12 $ 20.8  12
Trade name 8.4  10 1.0  5
Developed technology 60.0  10 6.9  5
Total $ 213.4  11.4 $ 28.7  10.1
The fair value of the identifiable intangible assets was determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the attrition rate and the discount rate selected to measure the risks inherent in the future cash flows.
The deferred income taxes reflect the tax effect of the differences between the carry-over tax basis and the fair value recorded in purchase accounting that are primarily associated with the recognition of identifiable intangible assets.
In connection with the Coventya Acquisition, the Company recorded $39.6 million of non-controlling interests in four entities. The most significant non-controlling interest represents 19.7% of a publicly traded entity in Turkey with a fair value of $32.4 million, which was determined based on the stock price on the acquisition date. Net income attributable to non-controlling interests is not material.
As of September 30, 2021, the purchase price allocation for each of the Acquisitions is preliminary. We expect to complete the purchase price allocation within the applicable one year measurement period.
The Acquisitions were not significant to our Condensed Consolidated Financial Statements, therefore, pro forma and post acquisition results of operations have not been presented.