Note 30. Acquisition and divestment of operations, discontinued operations and assets held for sale

The acquisitions and divestments of business combinations executed in 2019 are set out below. Annual revenue and number of employees reflect the situation at the date of the respective transaction. Goodwill is not tax deductible.

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Business area

Company

Acquisition date

Annual revenue

No. of employees

1)	Belongs to cash generating unit Business area level SMS
2)	Belongs to cash generating unit Seco Tools
3)	Belongs to cash generating unit Walter Group

Sandvik Machining Solutions

Wetmore Tool & Engineering¹⁾

9 January 2019

160 MSEK in 2017

170

Sandvik Mining and Rock Technology

Artisan

11 February 2019

12 MUSD in 2017

Sandvik Machining Solutions

OSK²⁾

10 April 2019

120 MSEK in 2017

Sandvik Mining and Rock Technology

Newtrax

17 June 2019

26 MCAD in 2018

120

Sandvik Machining Solutions

BeamIT, 30% stake¹⁾

12 July 2019

70 MSEK in 2018

Sandvik Materials Technology

Thermaltek

31 December 2019

13 MUSD in 2018

Sandvik Machining Solutions

Melin Tool Company³⁾

31 December 2019

22 MUSD in 2018

100

Total fair value of assets and liabilities of acquired businesses in 2019

The fair value of acquired assets and assessed liabilities has been preliminarily established for the acquisitions of Newtrax, Melin Tool and Thermaltek. Only minor IFRS adjustments were made to the acquisition values.

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Fair value recognized in the Group during 2019
	Sandvik Machining Solutions	Sandvik Mining and Rock Technology	Sandvik Materials Technology	Total
Intangible assets	—	23	—	23
Property, plant and equipment	47	29	—	76
Inventories	52	61	—	113
Current receivables	89	204	—	293
Cash and cash equivalents	3	38	—	41
Provisions	–	–22	—	–22
Interest-bearing liabilities	–28	–245	—	–273
Non-interest-bearing liabilities	–94	–178	—	–272
Net identifiable assets and liabilities	69	–90	—	–21
Goodwill and surplus values	730	930	154	1 814
Purchase consideration	–799	–840	–154	–1,793
Cash and cash equivalents in the acquired business	3	38	—	41
Repayment of loans	—	—	—	—
Transaction expenses	–46	–74	—	–120
Net cash outflow	–842	–876	–154	–1,872

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Contributions from companies acquired in 2019 by business area
	Sandvik Machining Solutions	Sandvik Mining and Rock Technology	Sandvik Material Technology	Total
Contributions as of acquisition date
Revenue	211	83	—	294
Profit/loss for the year	–26	–124	—	–150

Contributions if the acquisition date would have been 1 January 2019
Revenue	447	293	126	866
Profit/loss for the year	–9	–147	27	–129

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Change of total fair value recognized in the Group from businesses acquired during 2018
	2018	2019	Change	2018	2019	Change	2018	2019	Change
	Machining Solutions					Mining and Rock Technoloy
	Metrologic			Dura-Mill			Inrock

Intangible assets	1463	1463	—	—	4	4	—	—	—
Property, plant and equipment	29	49	20	—	11	11	84	93	9
Inventories	7	7	—	—	16	16	65	65	—
Current receivables	282	282	—	—	7	7	172	172	—
Cash and cash equivalents	314	314	—	—	6	6	—	—	—
Provisions	–10	–10	—	—	—	—	—	—	—
Interest-bearing liabilities	–2	–2	—	—	–1	–1	–5	–8	–3
Non-interest-bearing liabilities	–2147	–2147	—	—	–2	–2	–325	–325	0
Net identifiable assets and liabilities	–64	–44	20	–	42	42	–9	–3	6
Goodwill and surplus values	1966	1882	–84	146	104	–42	681	665	–16
Purchase consideration	–1902	–1838	64	–146	–146	1	–672	–662	10
Cash and cash equivalents in the acquired business	314	314	—	—	—	—	—	—	—
Repayment of loans	–1924	–1924	—	–0	–0	0	–171	–171	—
Transaction expenses	–68	–68	—	—	—	—	—	—	—
Net cash outflow	–3580	–3516	64	–146	–146	1	–843	–833	10

Discontinued operations

The Mining Systems business was divested to FLSmidth and NEPEAN already in 2017, however a number of ongoing projects were kept to be delivered by Sandvik in 2017–2019, though an operational agreement with FLSmidth. The majority of the projects were completed by the end of 2019, however Mining Systems still has some personnel and guarantees that expire in 2020 and 2021.

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Income statement for discontinued operations
	2018	2019
Revenue	852	295
Cost of sales and services	–1,174	–385
Gross profit	–322	–90
Selling expenses	–42	–29
Administrative expenses	–110	–45
Research and development costs	–6	0
Other operating income	12	4
Other operating expenses	–84	–44
Operating loss	–552	–204
Financial income	—	—
Financial expenses	8	–1
Net financing costs	8	–1
Loss after financial items	–545	–205
Income tax	—	—
Loss for the year	–545	–205

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Cash flow statement from discontinued operations
	2018	2019
Cash flow from operating activities	–439	–152
Cash flow from investing activities	2	16
Cash flow from financing activities	–2	–2
Cash flow from discontinued activities	–439	–138

Assets held for sale

During October 2019 Sandvik signed an agreement to divest the segment Oil and Gas which is the majority of Drilling and Completions (Varel) to the private equity firm Blue Water Energy and its co-investor, the privately owned Nixon Energy Investments. Sandvik will remain as minority owner of 30 percent of the company and hold a position on the board. Since the recovery of the investment is principally through sale the assets and liabilities were classified as a disposal group held for sale. The disposal group was measured at fair value less costs to sell. The transaction triggered a write-down of goodwill and other intangible assets with an effect on net result of 3.9 million SEK. Goodwill is not tax deductible. The foreign currency translation differences relating to the Varel disposal group amounts to –428 million SEK at the balance sheet date. At the disposal date, Sandvik, will recognize the remaining 30 percent of Drilling and Completion (Varel) as an associated company. The associate will be measured at fair value at disposal date (closing date) and is subsequently accounted for using the equity method. Closing of the transaction is expected during the first quarter of 2020.

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Assets and liabilities held for sale
	2018	2019
Intangible assets	—	18
Property, plant and equipment	26	249
Right of Use Assets	—	57
Financial assets	4	111
Inventories	72	571
Trade receivables	234	535
Other current assets	305	273
Total assets	641	1,815
Provisions	4	312
Interest-bearing liabilities	0	88
Accounts payable	138	171
Accrued expenses and deferred income	85	110
Other non-interest-bearing liabilities	385	199
Total liabilities	612	880

Divestments

No divestments during 2019. Some minor adjustments were made to the final values of previous years divestments.