SALE OF JOINT VENTURE
On July 4, 2010, the Company entered into a joint venture with Cooper Industries, plc (“Cooper”), combining certain of the Company’s hand tool businesses with Cooper’s Tools business to form a new entity called Apex Tool Group, LLC (“Apex”). During the period that Cooper and the Company owned Apex, each of Cooper and the Company owned a 50% interest in Apex and had an equal number of representatives on Apex’s Board of Directors. Neither joint venture partner controlled the significant operating and financing activities of Apex. The Company accounted for its investment in the joint venture based on the equity method of accounting.
In February 2013, the Company and Cooper sold Apex to an unrelated third party for approximately $1.6 billion. The Company received $797 million from the sale, consisting of cash of $759 million (including $67 million of dividends received prior to closing) and a note receivable of $38 million. The Company recognized an after-tax gain of $144 million or $0.20 per diluted share in connection with this transaction. As of December 31, 2013, the Company had collected the majority of this note receivable.
The gain is computed as the difference between the book value of the Company's investment in Apex at the time of sale and the fair value of the consideration received in exchange, as indicated in the table below ($ in millions):
|
| | | |
Fair value of consideration received: | |
Cash, including $66.6 of dividends received during 2013 prior to the closing of the sale | $ | 758.6 |
|
Note receivable | 38.5 |
|
Total fair value of consideration received | 797.1 |
|
Less book value of investment in unconsolidated joint venture | 545.6 |
|
Less other related costs and expenses | 21.7 |
|
Pre-tax gain on sale of unconsolidated joint venture | 229.8 |
|
Income tax expense | 86.2 |
|
After-tax gain on sale of unconsolidated joint venture | $ | 143.6 |
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The Company's share of the 2013 earnings generated by Apex prior to the closing of the sale was insignificant. The Company recorded $70 million and $67 million related to its equity in the earnings of Apex during the years ended December 31, 2012 and 2011, respectively, reflecting its 50% ownership position. Subsequent to the sale of its investment in Apex, the Company has no continuing involvement in Apex's operations.
