ACQUISITIONS

The Company evaluates each of its acquisitions under the accounting guidance framework to determine whether to treat an acquisition as an asset acquisition or a business combination. For those transactions treated as asset acquisitions, the purchase price is allocated to the assets acquired and liabilities assumed, with no recognition of goodwill. For those transactions treated as business combinations, the estimates of the fair value of the assets or rights acquired and liabilities assumed at the date of the applicable acquisition are subject to adjustment during the measurement period (up to one year from the particular acquisition date). The primary areas of the accounting for the acquisitions that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, which may include contingent consideration, residual goodwill and any related tax impact.

The fair value of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. While the Company believes that such preliminary estimates provide a reasonable basis for estimating the fair value of assets acquired and liabilities assumed, it evaluates any necessary information prior to finalization of the fair value. During the measurement period, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the revised estimated values of those assets or liabilities as of that date.

Impact of current year acquisitions—The Company typically acquires communications sites from wireless carriers or other tower operators and subsequently integrates those sites into its existing portfolio of communications sites. The financial results of the Company’s acquisitions have been included in the Company’s consolidated statements of operations for the year ended December 31, 2017 from the date of the respective acquisition. The date of acquisition, and by extension the point at which the Company begins to recognize the results of an acquisition, may depend on, among other things, the receipt of contractual consents, the commencement and extent of leasing arrangements and the timing of the transfer of title or rights to the assets, which may be accomplished in phases. Sites acquired from communications service providers may never have been operated as a business and may instead have been utilized solely by the seller as a component of its network infrastructure. An acquisition may or may not involve the transfer of business operations or employees.

For those acquisitions accounted for as business combinations, the Company recognizes acquisition and merger related expenses in the period in which they are incurred and services are received; for transactions accounted for as asset acquisitions, these costs are capitalized as part of the purchase price. Acquisition and merger related costs may include finder’s fees, advisory, legal, accounting, valuation and other professional or consulting fees and general administrative costs directly related to the transaction. Integration costs include incremental and non-recurring costs necessary to convert data, retain employees and otherwise enable the Company to operate new businesses or assets efficiently. The Company records acquisition and merger related expenses for business combinations, as well as integration costs for all acquisitions, in Other operating expenses in the consolidated statements of operations.

During the years ended December 31, 2017, 2016 and 2015, the Company recorded the following acquisition and merger related expenses for business combinations and integration costs:



	Year Ended December 31,
	2017		2016		2015

Acquisition and merger related expenses	$	16.3	$	15.9	$	18.8
Integration costs	$	11.5	$	9.9	$	18.1

The Company also recorded aggregate purchase price refunds of $22.2 million during the year ended December 31, 2017. The refunds primarily related to an acquisition in Brazil in 2014 for which the measurement period has closed.

2017 Transactions

The estimated aggregate impact of the 2017 acquisitions on the Company’s revenues and gross margin for the year ended December 31, 2017 was approximately $82.1 million and $59.3 million, respectively. The revenues and gross margin amounts also reflect incremental revenues from the addition of new tenants to such sites subsequent to the transaction date.

FPS Towers France—On February 15, 2017, ATC Europe acquired 100% of the outstanding shares of FPS Towers (“FPS”) from Antin Infrastructure Partners and the individuals party to the purchase agreement (the “FPS Acquisition”), for total consideration of 727.2 million Euros ($771.2 million at the date of acquisition). FPS owns and operates nearly 2,500 wireless tower sites in France. The Company made a loan to fund 225.0 million Euros ($238.6 million at the date of acquisition) of the total consideration. The remainder of the purchase price of 502.2 million Euros ($532.6 million at the date of acquisition) was funded by the Company and PGGM in proportion to their respective interests in ATC Europe. The Company funded its portion of the purchase price with borrowings under its multicurrency senior unsecured revolving credit facility entered into in June 2013, as amended (the “2013 Credit Facility”) and cash on hand. The acquisition is consistent with the Company’s strategy to expand in selected geographic areas. The acquisition was accounted for as a business combination and was subject to post-closing adjustments. All measurement-period adjustments were finalized as of December 31, 2017.

Mexico Acquisition—On November 17, 2017, the Company acquired 100% of the outstanding shares of entities holding urban telecommunications assets in Mexico, including more than 50,000 concrete poles and approximately 2,100 route miles of fiber, for total consideration of $505.8 million, including value-added tax (at the date of acquisition). The acquisition was accounted for as a business combination and is subject to post-closing adjustments.

Other Acquisitions—During the year ended December 31, 2017, the Company acquired a total of 2,453 communications sites in the United States, Brazil, Chile, Colombia, Germany, Mexico, Nigeria, Paraguay and Peru for an aggregate purchase price of $814.0 million. Of the aggregate purchase price, $22.5 million is reflected in Accounts payable in the consolidated balance sheet as of December 31, 2017. These acquisitions were accounted for as asset acquisitions.

The following table summarizes the allocations of the purchase prices for the fiscal year 2017 acquisitions based upon their estimated fair value at the date of acquisition:



	EMEA			Latin America
	FPS Towers France (1)			Mexico (1)			Other (2) (3)
	Final Allocation			Preliminary Allocation
Current assets	$	34.5		$	44.4		$	12.7
Non-current assets	15.0			—			19.7
Property and equipment	122.9			94.0			290.0
Intangible assets (4):
Tenant-related intangible assets	440.7			153.3			364.7
Network location intangible assets	113.0			—			154.3
Other intangible assets	8.5			22.0			—
Current liabilities	(29.0		)	(28.8		)	(10.5		)
Deferred tax liability	(135.4		)	(38.8		)	(2.7		)
Other non-current liabilities	(19.9		)	(4.5		)	(14.2		)
Net assets acquired	550.3			241.6			814.0
Goodwill (5)	220.9			264.2			—
Fair value of net assets acquired	771.2			505.8			814.0
Debt assumed	—			—			—
Purchase price	$	771.2		$	505.8		$	814.0

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(1)	Accounted for as a business combination.


(2)	Accounted for as asset acquisitions.


(3)	Includes 127 sites in Peru held pursuant to long-term capital leases.


(4)	Tenant-related intangible assets, network location intangible assets and other intangible assets are amortized on a straight-line basis over periods of up to 20 years.


(5)	Primarily results from purchase accounting adjustments, which are not deductible for tax purposes.

2016 Transactions

During the year ended December 31, 2017, post-closing adjustments impacted the 2016 acquisitions as follows:

Viom Acquisition—On April 21, 2016, the Company acquired a 51% controlling ownership interest in Viom, a telecommunications infrastructure company that owns and operates wireless communications towers and indoor DAS networks in India (the “Viom Acquisition”). Consideration for the acquisition included 76.4 billion Indian Rupees (“INR”) in cash ($1.1 billion at the date of acquisition), as well as the assumption of approximately 52.3 billion INR ($0.8 billion at the date of the acquisition) of existing debt, which included 1.7 billion INR ($25.1 million at the date of the acquisition) of mandatorily redeemable preference shares issued by Viom (the “Viom Preference Shares”).

Other Acquisitions—During the year ended December 31, 2016, the Company acquired a total of 891 communications sites in the United States, Brazil, Chile, Germany, Mexico, Nigeria and South Africa, and a company holding urban telecommunications assets and fiber in Argentina, for an aggregate purchase price of $304.4 million (including contingent consideration of $8.8 million).

The following table summarizes the preliminary and updated allocations of the purchase prices paid and the amounts of assets acquired and liabilities assumed for the fiscal year 2016 acquisitions based upon their estimated fair value at the date of acquisition. Balances are reflected in the accompanying consolidated balance sheet as of December 31, 2017.



	Preliminary Allocation (1)						Updated Allocation
	Asia			Other (2)			Asia			Other (2)
	Viom			Other (2)			Viom (3)			Other (2)
Current assets	$	276.6		$	25.5		$	281.9		$	24.5
Non-current assets	57.6			2.3			52.3			2.3
Property and equipment	702.0			81.5			705.8			81.5
Intangible assets (4):
Tenant-related intangible assets	1,369.6			105.6			1,369.6			105.6
Network location intangible assets	666.4			83.6			666.4			83.6
Current liabilities	(195.9		)	(14.8		)	(201.1		)	(14.8		)
Deferred tax liability	(619.1		)	(43.8		)	(619.1		)	(43.4		)
Other non-current liabilities	(102.8		)	(29.4		)	(101.8		)	(29.4		)
Net assets acquired	2,154.4			210.5			2,154.0			209.9
Goodwill (5)	881.8			93.9			882.2			94.5
Fair value of net assets acquired	3,036.2			304.4			3,036.2			304.4
Debt assumed	(786.8		)	—			(786.8		)	—
Redeemable noncontrolling interests	(1,100.9		)	—			(1,100.9		)	—
Purchase Price	$	1,148.5		$	304.4		$	1,148.5		$	304.4

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(1)	As reported for the year ended December 31, 2016.


(2)	Of the total purchase price, $12.1 million was reflected in Accounts payable in the consolidated balance sheet as of December 31, 2016.


(3)	The allocation of the purchase price for the Viom Acquisition was finalized during the year ended December 31, 2017.


(4)	Tenant-related intangible assets and network location intangible assets are amortized on a straight-line basis over periods of up to 20 years.


(5)	Primarily results from purchase accounting adjustments, which are at least partially deductible for tax purposes.

Pro Forma Consolidated Results (Unaudited)

The following table presents the unaudited pro forma financial results as if the 2017 acquisitions had occurred on January 1, 2016 and the 2016 acquisitions had occurred on January 1, 2015. The pro forma results do not include any anticipated cost synergies, costs or other integration impacts. Accordingly, such pro forma amounts are not necessarily indicative of the results that actually would have occurred had the transactions been completed on the dates indicated, nor are they indicative of the future operating results of the Company.



	Year Ended December 31,
	2017		2016
Pro forma revenues	$	6,775.3	$	6,240.6
Pro forma net income attributable to American Tower Corporation common stockholders	$	1,145.5	$	822.8
Pro forma net income per common share amounts:
Basic net income attributable to American Tower Corporation common stockholders	$	2.68	$	1.94
Diluted net income attributable to American Tower Corporation common stockholders	$	2.65	$	1.92

Other Signed Acquisitions

Idea Cellular Limited—On November 13, 2017, the Company entered into an agreement with Idea Cellular Limited (“Idea”) and Idea’s subsidiary, Idea Cellular Infrastructure Services Limited (“ICISL”), to acquire 100% of the outstanding shares of ICISL, a telecommunications company that owns and operates approximately 9,900 communication sites in India, for cash consideration of approximately 40 billion INR ($611.4 million at the date of signing), subject to certain adjustments (the “Idea Transaction”).

Vodafone India Limited—On November 13, 2017, the Company entered into an agreement with Vodafone India Limited and Vodafone Mobile Services Limited (together, “Vodafone”) to acquire their telecommunications site businesses, which consist of an aggregate of approximately 10,235 communication sites, for aggregate cash consideration of approximately 38.5 billion INR ($588.4 million at the date of signing), subject to certain adjustments (the “Vodafone Transaction” and, together with the Idea Transaction, the “India Transactions”).

Consummation of the India Transactions is subject to certain conditions, including regulatory approval. The India Transactions are expected to close in the first half of 2018.

Airtel Tanzania—On March 17, 2016, the Company entered into a definitive agreement with Bharti Airtel Limited, through its subsidiary company Airtel Tanzania Limited (“Airtel Tanzania”), pursuant to which the Company could, subject to a number of conditions, acquire certain of Airtel Tanzania’s communications sites in Tanzania. In light of subsequent legislation in Tanzania, the Company did not extend the agreement beyond the expiration date therein. Accordingly, on March 17, 2017, the agreement expired pursuant to its terms and is no longer in effect.

Acquisition-Related Contingent Consideration

The Company may be required to pay additional consideration under certain agreements for the acquisition of communications sites if specific conditions are met or events occur. In Ghana, the Company may be required to pay additional consideration upon the conversion of certain barter agreements with other wireless carriers to cash-paying lease agreements. In the United States and South Africa, the Company may be required to pay additional consideration if certain pre-designated tenant leases commence during a specified period of time.

A summary of the value of the Company’s contingent consideration obligations are as follows:



					Year Ended December 31, 2017
	Maximum potential value (1)		Estimated value at December 31, 2017		Additions		Settlements		Change in Fair Value
Colombia	$	—	$	—	$	—	$	—	$	(5.4	)
Ghana	0.6		0.6		—		—		0.0
South Africa	9.1		9.1		—		—		(0.9		)
United States	0.4		0.4		—		—		0.0
Total	$	10.1	$	10.1	$	—	$	—	$	(6.3	)

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(1)	The maximum potential value is based on exchange rates at December 31, 2017. The minimum value would be no less than $9.1 million.

For more information regarding acquisition-related contingent consideration, see note 11.