Annual report pursuant to Section 13 and 15(d)

Business Acquisitions

v2.4.0.8
Business Acquisitions
12 Months Ended
Sep. 30, 2014
Business Acquisitions  
Business Acquisitions

3.Business Acquisitions

 

Coperion

 

We completed the acquisition of Coperion on December 1, 2012, in a transaction valued at $540.7.  The aggregate purchase consideration consisted of $269.1 of cash, net of cash acquired, and the assumption of $146.0 of debt and $129.9 of pension liabilities.  We utilized $426.3 of borrowings under our revolving credit facility and cash on hand to finance the acquisition, including the repayment of $146.0 of debt outstanding under Coperion’s prior financing arrangements.

 

Based in Stuttgart, Germany, Coperion is a global leader in the manufacture of compounding, extrusion, and material handling equipment used in a broad range of industries, including plastics, chemicals, food processing, and pharmaceutical.  Coperion has been in business since 1879, and operates nine manufacturing sites in Germany, the United States (“U.S.”), China, and India, and has sales offices in approximately 30 locations in the Americas, Europe, and Asia.  Coperion had approximately 2,000 employees worldwide as of September 30, 2014.  Approximately one-third of Coperion’s revenue is derived from replacement parts and service, generating a large portion of recurring business due to its well-positioned service network and active installed base of equipment across the world.

 

This acquisition was the largest in the Company’s history and represented an important step in the execution of our strategic plans to further diversify Hillenbrand and accelerate the growth of the Process Equipment Group.  Combining our product offerings to provide a more complete system solution is our highest priority from an integration perspective.  In addition, we believe leveraging Coperion’s global infrastructure will enable the existing businesses within the Process Equipment Group to enter new global markets more quickly.  We also expect the Process Equipment Group’s existing strong U.S. sales network will enhance Coperion’s expansion in North America.  Finally, the application of the Company’s Lean expertise and other core competencies to Coperion’s operations is expected to contribute to improved margins and increased customer satisfaction.

 

The following table summarizes fair values of the assets acquired and liabilities assumed in the Coperion acquisition:

 

 

 

December 1, 2012

 

Cash and cash equivalents

 

$

32.8 

 

Inventory

 

112.4 

 

Current assets, excluding cash and cash equivalents and inventory

 

180.0 

 

Property, plant, and equipment

 

54.4 

 

Identifiable intangible assets

 

291.8 

 

Goodwill

 

273.8 

 

Other assets

 

2.1 

 

Total assets

 

947.3 

 

 

 

 

 

Current liabilities

 

287.3 

 

Accrued pension obligations

 

129.9 

 

Deferred income taxes

 

67.3 

 

Other long-term liabilities

 

6.7 

 

Total liabilities

 

491.2 

 

 

 

 

 

Noncontrolling interests

 

8.2 

 

 

 

 

 

Aggregate purchase price

 

$

447.9 

 

 

Final purchase accounting adjustments were made in 2014 that increased the accrued pension obligations ($4.3) based on finalization of the actuarial analysis for Coperion’s defined benefit plans.  In addition, adjustments were made to increase current liabilities ($1.3) and noncontrolling interests ($1.7) and decrease deferred income taxes ($1.3).  Total purchase accounting adjustments increased goodwill by $6.0 in 2014.  These adjustments are reflected in the table above.

 

Goodwill is not deductible for tax purposes and was allocated entirely to the Process Equipment Group.  Fair value amounts assigned to identifiable finite-lived intangible assets are being amortized on a straight-line basis over their estimated useful lives.  The amounts and useful lives assigned to each asset type at the time of acquisition were:

 

 

 

Fair Values

 

Estimated
Useful Lives
(years)

 

Trade names

 

$

55.6 

 

Indefinite

 

Customer relationships

 

157.7 

 

20

 

Technology, including patents

 

44.2 

 

12

 

Backlog

 

34.3 

 

<1

 

Total identifiable intangible assets

 

$

291.8 

 

 

 

 

The unaudited pro forma information for the periods set forth below gives effect to the Coperion acquisition as if it had occurred at the beginning of 2012.  It included adjustments for additional interest expense, depreciation, and amortization.  Acquisition costs of $16.6 and backlog amortization and inventory step-up costs of $56.3 are not included in the pro forma information for 2013.  The unaudited pro forma information is presented for informational purposes only and does not necessarily reflect the results of operations that would actually have been achieved had the acquisition been consummated as of that time.

 

 

 

Fiscal Year Ended

 

 

 

September 30, 2013

 

Pro forma net revenue

 

$

1,668.6 

 

Pro forma net income(1)

 

118.4 

 

Pro forma basic earnings per share

 

1.89 

 

Pro forma diluted earnings per share

 

1.88 

 

 

 

(1)Pro forma net income attributable to Hillenbrand

 

Other Acquisitions

 

Batesville completed an acquisition in 2012 with a net purchase price of $5.9.  Final estimation of the fair value resulted in $2.6 of goodwill.

 

We incurred $8.4 of business acquisition and integration costs during 2014 recorded in operating expenses.