3Acquisitions and disposals of businesses, 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. If new information is obtained within one year since the date of acquisition about facts and circumstances that existed on the date of acquisition and, if this information was known on the date of acquisition would have resulted in additional assets and liabilities being recorded or a different measurement, then the accounting of the acquisition will be revised.

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 transfer the remaining 40 percent of the shares over the next five years. The total consideration amounts to CHF 15.4 million, of which CHF 6.9 million was paid in cash, CHF 2.9 million results 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.

Contingent consideration and purchase price not yet paid

The contingent consideration depends mainly on the achievement of an operating income (EBIT) target for 2024. Because of the small number of possible outcomes, the contingent consideration was estimated based on the most likely amount. It is expected that all targets could be achieved and the liability reflects the maximum amount payable.

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.

Others

On April 30, 2024, Sulzer acquired assets and liabilities that constitute a business, from Texas Electric Equipment Company Ltd. in the USA. The acquisition contributes to the group's Services business footprint in the USA. 

Cash flow from acquisition of subsidiaries

Contingent consideration

Disposals in 2023

In February 2023, the group entered into an agreement with a third party for the sale of four legal entities in Russia. From the date of the sales agreement, the group lost power over the relevant activities of these entities due to contractual requirements and the legal environment. Consequently, these four entities were deconsolidated in the first half of 2023, resulting in the derecognition of the assets and liabilities previously classified as held for sale. The deconsolidation resulted in a gain on deconsolidation amounting to CHF 8.0 million, of which CHF 11.2 million resulted from the reclassification of accumulated currency translation differences and CHF 0.6 million from the reclassification of cash flow hedge reserves, net of tax. The gain on deconsolidation was recorded in other operating income. The total net cash outflow from divestments of subsidiaries in the first half of 2023 amounted to CHF 32.0 million, with cash and cash equivalents in the amount of CHF 32.3 million derecognized as part of the divestments.

Transactions with non-controlling interests

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.