Acquisitions

3 Months Ended

Mar. 31, 2020

Automated Packaging Systems, LLC

On August 1, 2019 the Company acquired 100% of the limited liability company interest in Automated Packaging Systems, LLC, formerly, Automated Packaging Systems, Inc. (“Automated”), a manufacturer of automated bagging systems. The acquisition is included in our Product Care reporting segment. Automated offers opportunities to expand the Company's automated solutions and into adjacent markets.

Cash paid for Automated was $441.4 million. The preliminary opening balance sheet includes $58.2 million of assumed liabilities in connection with a deferred incentive compensation plan for Automated's European employees. Of this amount $19.7 million was paid during the fourth quarter 2019. Sealed Air will make the remaining payments to deferred incentive compensation plan participants in approximately equal installments in 2020 and 2021.

The purchase price was primarily funded with proceeds from the incremental term facility provided for under an amendment to our Credit Facility, as described in Note 14, "Debt and Credit Facilities," of the Notes to Condensed Consolidated Financial Statements. For the three months ended March 31, 2020, transaction expenses recognized for the Automated acquisition were $0.2 million. These expenses primarily relate to the first quarter purchase price adjustment and are included within selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

The following table summarizes the consideration transferred to acquire Automated and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed. The allocation of purchase price is still preliminary as the Company is still finalizing the final purchase price adjustment with the seller and must finalize other aspects of the valuation including deferred taxes and intangible valuations. Preliminary estimates will be finalized within one year of the date of acquisition.


	Revised Preliminary Allocation		Measurement Period		Revised Preliminary Allocation
(In millions)	As of August 1, 2019		Adjustments		As of March 31, 2020
Total consideration transferred	$	445.7	$	(4.3)	$	441.4

Assets:
Cash and cash equivalents	16.0		(0.2)		15.8
Trade receivables, net	37.3		—		37.3
Other receivables	0.3		—		0.3
Inventories, net	40.7		(0.7)		40.0
Prepaid expenses and other current assets	2.3		—		2.3
Property and equipment, net⁽¹⁾	76.9		9.3		86.2
Identifiable intangible assets, net⁽¹⁾	81.1		(0.6)		80.5
Goodwill	261.3		(13.4)		247.9
Operating lease right-of-use-assets	—		4.3		4.3
Other non-current assets	24.7		1.2		25.9
Total assets	$	540.6	$	(0.1)	$	540.5
Liabilities:
Accounts payable	12.0		—		12.0
Current portion of long-term debt	2.6		—		2.6
Current portion of operating lease liabilities	—		1.5		1.5

Other current liabilities	56.2		(2.2)		54.0
Long-term debt, less current portion	4.3		—		4.3
Long-term operating lease liabilities, less current portion	—		2.8		2.8
Deferred taxes	—		0.5		0.5
Other non-current liabilities	19.8		1.6		21.4
Total liabilities	$	94.9	$	4.2	$	99.1

⁽¹⁾In the Preliminary Allocation as of August 1, 2019, $2.4 million of software was initially recorded as computer hardware within Property and equipment, net as disclosed in the 2019 Form 10-K. The asset represents software acquired and has been reclassified in identifiable intangible assets, net within Revised Preliminary Allocation in the table above.

Measurement period adjustments recorded during the three months ended March 31, 2020 and the change in consideration transferred were primarily a result of net working capital and purchase price settlements with the seller of $4.3 million.

The following table summarizes the acquired identifiable intangible assets, net and their useful lives.


	Amount		Useful life
	(in millions)		(in years)
Customer relationships	$	28.9	13.0
Trademarks and tradenames	15.6		9.1
Capitalized software	2.4		3.0
Technology	29.6		6.4
Backlog	4.0		0.4
Total intangible assets with definite lives	$	80.5

Goodwill is a result of the expected synergies and cross-selling opportunities this acquisition is expected to bring as well as the expected growth potential in Automated Packaging Systems' automated and sustainable solutions. Goodwill allocated to U.S. entities is deductible for tax purposes. Goodwill allocated to foreign entities is not deductible for tax purposes. The goodwill balance has been recorded to the Product Care reportable segment.

Other non-current assets include the net overfunded position of a closed defined benefit pension plan in the United Kingdom. Refer to Note 17, "Defined Benefit Pension Plans and Other Post-Employment Benefit Plans," of the Notes to Condensed Consolidated Financial Statements for more detail on the Company's other defined benefit pension plans.

In conjunction with the acquisition and subsequent integration, the Company expects to incur restructuring charges. No restructuring accrual is included in our opening balance sheet as the liability did not exist at the time of acquisition. Refer to Note 13, "Restructuring Activities," of the Notes to Condensed Consolidated Financial Statements for more detail on the Company's restructuring activity.

The inclusion of Automated in our consolidated financial statements is not deemed material with respect to the requirement to provide pro forma results of operations in ASC 805. As such, pro forma information is not presented.

Other 2019 Acquisition Activity

During the second quarter of 2019, Food Care had acquisition activity resulting in a total purchase price paid of $23.4 million. The Company allocated the consideration transferred to the fair value of assets acquired and liabilities assumed, resulting in an allocation to goodwill of $6.0 million. The final purchase price adjustments resulting in an increase to goodwill of $0.3 million were recorded in the third quarter of 2019. Identifiable intangible assets acquired were not material.