Sulzer Annual Report 2024

3 Acquisitions of subsidiaries and transactions with non-controlling interests

Acquisitions in 2024

The table below presents the amounts of the assets acquired, the liabilities assumed, the goodwill recorded and the consideration transferred on the date of acquisition.

millions of CHF	Owatec Group Oy	Other	Total
Other Intangible assets	5.5	1.5	7.0
Property, plant and equipment	0.9	4.0	4.8
Other non-current assets	0.7	–	0.7
Other current assets	2.3	0.3	2.6
Cash and cash equivalents	0.5	–	0.5
Non-current borrowings	–1.6	–	–1.6
Non-current liabilities (excluding borrowings)	–1.4	–	–1.4
Current borrowings	–1.3	–	–1.3
Current liabilities (excluding borrowings)	–1.0	–0.1	–1.1
Net identifiable assets	4.6	5.7	10.3
Non-controlling interests	0.0	–	0.0
Goodwill	10.7	0.1	10.8
Total consideration	15.4	5.8	21.1

Purchase price paid in cash	6.9	5.8	12.7
Purchase price not yet paid	5.6	–	5.6
Contingent consideration	2.9	–	2.9
Total consideration	15.4	5.8	21.1

Owatec Group Oy

On April 3, 2024, Sulzer acquired a controlling stake in Owatec Group Oy (“Owatec”), a provider of mobile water treatment solutions headquartered in Finland. Sulzer acquired shares representing an ownership of 60 percent in Owatec and entered into a binding agreement to acquire the remaining 40 percent of the shares over the next five years. The total consideration amounted to CHF 15.4 million, of which CHF 6.9 million was paid in cash, CHF 2.9 million resulted from a contingent consideration agreement and CHF 5.6 million relate to the purchase price not yet paid. The purchase price not yet paid represents a liability for the estimated payments for the remaining 40 percent shares not yet transferred.

The goodwill is attributable to the skills and knowledge of the workforce and favorable synergies. The goodwill is not expected to be deductible for tax purposes. The fair value of the trade accounts receivable amounts to CHF 0.4 million, which is equal to the gross contractual amount.

The contingent consideration was mainly depending on the achievement of an operating income (EBIT) target for 2024. At the acquisition date, the contingent consideration was estimated based on the most likely amount and the recognized liability reflected the maximum amount payable as it was expected at that time that all targets could be achieved. As of year end 2024, the targets were only partially met and a contingent consideration liability in the amount of CHF 2.0 million was derecognized, with a corresponding income recorded in other operating income (see note 10).

The liability for the purchase price not yet paid was recorded in other non-current liabilities. The shares were agreed to be transferred in four tranches, with payments expected each year in the years 2026 to 2029. The payments depend on the achieved average operating income (EBIT) in the two years before the payment, with an agreed minimum and maximum payment amount for each tranche. The recorded liability consists of the discounted expected payments estimated with the expected value method.

Cash flow from acquisition of subsidiaries

millions of CHF	2024	2023
Cash consideration paid	–12.7	–
Cash acquired	0.5	–
Contingent consideration paid	–0.9	–1.3
Total cash flow from acquisitions, net of cash acquired	–13.1	–1.3

Contingent consideration for acquisitions

millions of CHF	2024	2023
Balance as of January 1	-	1.9
Assumed in a business combination	2.9	–
Payment of contingent consideration 1)	–0.9	–1.3
Release to other operating income	–2.0	–0.5
Currency translation differences	-	–0.1
Total contingent consideration as of December 31	-	–

1) The payments are presented in the cash flow statement in “Acquisitions of subsidiaries, net of cash acquired”.

Transactions with non-controlling interests

millions of CHF	2024	2023
Carrying amount of non-controlling interests acquired (disposed)	–1.5	0.4
Consideration received (paid) in cash	0.0	–19.4
Non-cash consideration	–	–2.8
Consideration payable	–	–0.6
Decrease in equity attributable to owners of Sulzer Ltd	–1.5	–22.4

After entering into a collaboration with a local partner, the group’s ownership in Sulzer Pumps (Nigeria) Ltd. decreased in the second half of 2024. The group continues to exercise strategic and management control over the subsidiary following the group’s reduction in ownership.

In the first half of 2024, a payment of CHF 0.3 million in connection with the acquisition of the remaining 25 percent ownership in Sulzer Saudi Pumps Company in 2023 is reported in the cash flow statement in divestiture (acquisition) of non-controlling interests.

In January 2023, the group acquired the remaining 25% ownership in Sulzer Saudi Pump Company Limited for a total consideration of CHF 22.8 million, of which CHF 19.4 million were paid in cash.