Discontinued Operations, Divestitures and Acquisitions

Discontinued Operations

On March 25, 2017, we entered into a definitive agreement to sell our Diversey Care division and the food hygiene and cleaning business within our Food Care division for gross proceeds of USD equivalent of $3.2 billion, subject to customary closing conditions. The transaction was completed on September 6, 2017. During 2018, we recorded an additional net gain on the sale of Diversey of $7.4 million, net of taxes.

We have classified the operating results from this business, together with certain costs related to the divestiture transaction, as discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017.

Summary operating results of Diversey were as follows:



	Three Months Ended March 31,
(In millions)	2017
Net sales	$	581.7
Cost of sales	330.5
Gross profit	251.2
Selling, general and administrative expenses	198.9
Amortization expense of intangible assets acquired	17.7
Operating profit	34.6
Other expense, net	(2.9		)
Earnings from discontinued operations before income tax provision⁽¹⁾	31.7
Income tax provision from discontinued operations	21.2
Net earnings from discontinued operations	$	10.5


⁽¹⁾	For the three months ended March 31, 2017, net earnings from discontinued operations was impacted by a tax expense of $19.5 million related to a change in the repatriation strategy of foreign earnings.

The following table presents selected financial information regarding cash flows of Diversey that are included within discontinued operations in the Condensed Consolidated Statements of Cash Flows:



	Three Months Ended March 31,
(In millions)	2017
Non-cash items included in net earnings from discontinued operations:
Depreciation and amortization	$	23.4
Share-based incentive compensation	3.3
Profit sharing expense	1.0
Provision for bad debt	1.3
Capital expenditures	3.4

The amounts disclosed in the tables above have been excluded from the Notes to Condensed Consolidated Financial Statements unless otherwise noted.

Divestitures

Divestiture of Embalagens Ltda.

On August 1, 2017, we entered into an agreement to sell our polystyrene food tray business in Guarulhos, Brazil for a gross purchase price of R$26.9 million (or $8.2 million as of the closing date of March 19, 2018). The purchase price is subject to working capital, cash and debt adjustments. As of March 31, 2018, the Company recognized a net gain on the sale of $1.0 million within other expense, net on the Condensed Consolidated Statement of Operations.

Acquisitions

Acquisition of Fagerdala

On October 2, 2017, the Company acquired Fagerdala Singapore Pte Ltd. ("Fagerdala"), a manufacturer and fabricator of polyethylene foam based in Singapore, to join its Product Care division. We acquired 100% of Fagerdala shares for estimated consideration of S$144.2 million, or $106.2 million, net of cash acquired of $13.3 million, inclusive of purchase price adjustments which will be finalized in 2018. We acquired Fagerdala to leverage its manufacturing footprint in Asia, expertise in foam manufacturing and fabrication, and commercial organization to grow sales in the consumer electronics, medical equipment and devices, automotive, temperature assurance, and e-commerce fulfillment sectors.

The following table summarizes the consideration transferred to acquire Fagerdala and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed.



	Preliminary Allocation	Measurement Period		Revised Preliminary Allocation
(In millions)	As of October 2, 2017	Adjustments		As of March 31, 2018
Total consideration transferred	$106.6	$(0.4)		$106.2

Assets:
Cash and cash equivalents	$13.3			$13.3
Trade receivables, net	22.4			22.4
Inventory, net	10.0			10.0
Prepaid expenses and other current assets	8.4			8.4
Property and equipment, net	23.3			23.3
Intangible assets, net	41.4	0.7		42.1
Goodwill	39.3	(0.2	)	39.1
Assets	$158.1	$0.5		$158.6
Liabilities:
Short-term borrowings	$14.0			$14.0
Accounts payable	6.9			6.9
Other current liabilities	15.1	0.9		16.0
Long-term debt, less current portion	3.8			3.8
Non-current deferred taxes	11.7			11.7
Liabilities	$51.5	$0.9		$52.4

The valuation of property and equipment, net and intangible assets is preliminary. We expect to complete the valuation in the first half of 2018. All of the goodwill is allocated to the Product Care reporting unit. The $42.1 million fair value allocated to definite-lived intangible assets consists primarily of $25.4 million of customer relationships with a useful life of seventeen years, $10.6 million of trademarks and tradenames with a useful life of fifteen years and various acquired technologies of $6.1 million with useful lives of thirteen years.

Acquisition of Deltaplam

On August 1, 2017, the Food Care division acquired Deltaplam Embalagens Indústria e Comércio Ltda ("Deltaplam"), a family owned and operated Brazilian flexible packaging manufacturer. The preliminary fair value of the consideration transferred was approximately $25.8 million. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition date, which included $8.1 million of goodwill and $7.4 million of intangible assets. As of March 31, 2018, the fair value of the consideration transferred was approximately $25.3 million, which included $9.7 million of goodwill and $5.9 million of intangible assets.