6. Acquisitions

2015 Acquisitions

During 2015, the Company completed acquisitions of Shell portfolios related to our fuel card businesses in Europe, as well as a small acquisition internationally, with an aggregate purchase price of $45.7 million, made additional investments of $8.4 million related to its equity method investment at Masternaut Group Holdings Limited (“Masternaut”) and deferred payments of $3.4 million related to acquisitions occurring in prior years. The following table summarizes the preliminary acquisition accounting for the acquisitions completed during 2015 (in thousands):


Trade and other receivables	$	462
Prepaid expenses and other		1,093
Property and equipment		203
Goodwill		10,082
Other intangible assets		39,433
Deferred tax liabilities		(2,558	)
Liabilities assumed		(3,055	)

Aggregate purchase prices	$	45,660

The estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):


	Useful Lives (in Years)		Value
Customer relationships		14-20	$	39,433

			$	39,433

These acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements. The accounting for certain of these acquisitions is preliminary pending completing the valuation of intangible assets, income taxes and evaluation of acquired contingencies.

2014 Acquisitions

During 2014, the Company completed acquisitions with an aggregate purchase price of $3.67 billion, net of cash acquired of $165.8 million.

Equity Method Investment in Masternaut

On April 28, 2014, the Company completed an equity method investment in Masternaut, Europe’s largest provider of telematics solutions to commercial fleets. The Company owns 44% of the outstanding equity of Masternaut. This investment is included in “Equity method investment” in the Company’s consolidated balance sheets.

Comdata

On November 14, 2014, the Company acquired Comdata for $3.4 billion, net of cash acquired. Comdata is a business-to-business provider of innovative electronic payment solutions. As an issuer and a processor, Comdata provides fleet, virtual card and gift card solutions. This acquisition complemented the Company’s current fuel card business in the U.S. and added a new product with the virtual payments business. Goodwill recognized is comprised primarily of expected synergies from combining the operations of the Company and Comdata and assembled workforce. The goodwill acquired with this business is not deductible for tax purposes. FleetCor financed the acquisition with approximately $2.4 billion of new debt and the issuance of approximately 7.6 million shares of FleetCor common stock, including amounts applied at the closing to the repayment of Comdata’s debt. Results from the acquired business have been reported in the Company’s North America segment since the date of acquisition. The following table summarizes the final acquisition accounting for Comdata (in thousands):


Restricted cash	$	93,312
Trade and other receivables		638,137
Prepaid expenses and other		15,443
Property and equipment		17,984
Goodwill		2,253,348
Other intangible assets		1,630,700
Notes and other liabilities assumed		(804,032	)
Deferred tax liabilities		(423,977	)
Other long term liabilities		(6,841	)

Aggregate purchase price	$	3,414,074

Acquisition accounting adjustments recorded during 2015 at Comdata were not material.

The final estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):


	Useful Lives (in Years)		Value
Customer relationships		19	$	1,269,700
Trade names and trademarks—indefinite		N/A		237,100
Software		4 – 7		123,300
Non-competes		3		600

			$	1,630,700

Other

During 2014, the Company acquired Pacific Pride, a U.S. fuel card business, and a fuel card business from Shell in Germany. The following table summarizes the final acquisition accounting for these acquisitions during 2014 (in thousands):


Trade and other receivables	$	62,604
Prepaid expenses and other		232
Property and equipment		71
Goodwill		30,596
Other intangible assets		47,974
Notes and other liabilities assumed		(66,499	)

Aggregate purchase prices	$	74,978

Acquisition accounting adjustments recorded during 2015 were not material.

The final estimated fair value of intangible assets acquired and the related estimated useful lives consisted of the following (in thousands):


	Useful Lives (in Years)		Value
Customer relationships		8	$	15,574
Trade names and trademarks—indefinite		N/A		2,900
Franchisee agreements		20		29,500

			$	47,974

These acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.

2013 Acquisitions

During 2013, the Company completed acquisitions with an aggregate purchase price of $839.3 million, net of cash acquired of $35.6 million, which included deferred payments of $36.8 million and the estimated fair value of contingent consideration of $83.1 million. During 2014, the Company made deferred payments of purchase price related to 2013 acquisitions of $23.2 million.

For certain acquisitions in 2013, the consideration transferred includes contingent consideration based on achieving specific financial metrics in future periods. The contingent consideration agreements (the “agreements”) require the Company to pay the respective prior owners if earnings before interest, taxes, depreciation and amortization (EBITDA) and revenues grow at a specified rate over the most recent corresponding specified period, based on a sliding scale. The fair value of the arrangements included in the acquisition consideration was estimated using a Monte Carlo Simulation approach and the probability-weighted discounted cash flow approach and considered historic expenses, historic EBITDA and revenue growth and current projections for the respective acquired entities.

During 2014, the Company recorded adjustments to the estimated fair value of contingent consideration of $28.1 million, based on actual results of the business, which included the impact of an unfavorable tax judgment against VB during the fourth quarter of 2014. Adjustments are recorded within other operating, net within our consolidated statements of income. In February 2015, the Company paid $39.8 million of contingent consideration.

Fleet Card

On March 25, 2013, the Company acquired certain fuel card assets from GE Capital Australia’s Custom Fleet leasing business. The consideration for the transaction was paid using the Company’s existing cash and credit facilities. GE Capital’s “Fleet Card” is a multi-branded fuel card product with wide acceptance in fuel outlets and automotive service and repair centers across Australia. Through this transaction, the Company acquired the Fleet Card product, brand, acceptance network contracts, supplier contracts, and approximately one-third of the customer relationships with regards to fuel cards (together, “Fleet Card”). The remaining customer relationships were retained by Custom Fleet, and are comprised of companies which have commercial relationships with Custom Fleet beyond fueling, such as fleet management and leasing. The purpose of this acquisition was to establish the Company’s presence in the Australian marketplace. Results from the acquired business have been reported in the Company’s International segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill related to this acquisition is not deductible for tax purposes.

CardLink

On April 29, 2013, the Company acquired all of the outstanding stock of CardLink. The consideration for the transaction was paid using the Company’s existing cash and credit facilities. CardLink provides a proprietary fuel card program with acceptance at retail fueling stations across New Zealand. CardLink markets its fuel cards directly to mostly small-to-midsized businesses, and provides processing and outsourcing services to oil companies and other partners. With this transaction, the Company entered into a $12.0 million New Zealand dollar ($9.4 million) revolving line of credit, which will be used to fund the working capital needs of the CardLink business. The purpose of this acquisition was to enter the Australia and New Zealand regions and followed the Company’s recent purchase of GE Capital’s Fleet Card business in Australia. Results from the acquired business have been reported in the Company’s International segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill related to this acquisition is not deductible for tax purposes.

On August 9, 2013, the Company acquired all of the outstanding stock of VB Servicos, Comercio e Administracao LTDA (“VB”), a provider of transportation cards and vouchers in Brazil. The consideration for the transaction was paid using the Company’s existing cash and credit facilities. VB is a provider of transportation cards in Brazil where employers are required by legislation to provide certain employees with prepaid public transportation cards to subsidize their commuting expenses. VB also markets food cards. The purpose of this acquisition was to strengthen the Company’s presence in the Brazilian marketplace. Results from the acquired business have been reported in the Company’s International segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill related to this acquisition is deductible for tax purposes.

Epyx

On October 1, 2013, the Company acquired all of the outstanding stock of Epyx, a provider to the fleet maintenance, service and repair marketplace in the UK. Epyx provides an internet based system and a network of vehicle repair service garages to fleet operators in the UK. The Epyx service helps its customers better manage their vehicle maintenance, service, and repair needs. The Epyx service automates repair authorization, schedules service appointments, controls costs, and simplifies overall vehicle service administration. Epyx earns transaction fees on each of the millions of service incidents that it supports each year. The purpose of this acquisition was to allow the Company to extend beyond fleet fueling in the UK marketplace to fleet maintenance services, a complementary service to existing fleet customers. Results from the acquired business have been reported in the Company’s International segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill acquired with this business is not deductible for tax purposes.

On October 15, 2013, the Company acquired all of the outstanding stock of DB Trans S.A. (“DB”), a provider of payment solutions for independent truckers in Brazil. The purpose of this acquisition was to strengthen the Company’s presence in the Brazilian marketplace. Results from the acquired business have been reported in the Company’s International segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill acquired with this business is not deductible for tax purposes.

NexTraq

On October 17, 2013, the Company acquired all of the outstanding stock of NexTraq, a U.S. based provider of telematics solutions to small and mid-sized businesses. NexTraq provides fleet operators with an internet based system that enhances workforce productivity through real time vehicle tracking, route optimization, job dispatch, and fuel usage monitoring. The purpose of this acquisition was to provide the Company with a cross marketing opportunity due to the similarity of the commercial fleet customer base. Results from the acquired business have been reported in the Company’s North America segment since the date of acquisition. This business acquisition was not material individually or in the aggregate with other current year acquisitions to the Company’s consolidated financial statements. The goodwill acquired with this business is not deductible for tax purposes.

2013 Totals

The following table summarizes the final allocation of the purchase price for all acquisitions during 2013 (in thousands):


Trade and other receivables	$	71,767
Prepaid expenses and other		12,151
Property and equipment		5,791
Other long term assets		53,737
Goodwill		641,361
Other intangible assets		473,000
Notes and other liabilities assumed		(284,974	)
Deferred tax liabilities		(83,470	)
Other long term liabilities		(50,092	)

Aggregate purchase prices	$	839,271

Intangible assets allocated in connection with the purchase price allocations consisted of the following (in thousands):


	Useful Lives (in Years)		Value
Customer relationships		3 – 20	$	357,260
Trade names and trademarks—indefinite		N/A		46,900
Trade names and trademarks		15		200
Merchant network		10		16,750
Software		3 – 10		36,890
Non-competes		5		15,000

			$	473,000

Goodwill recognized is comprised primarily of expected synergies from combining the operations of the Company and the acquired businesses. The Company incurred and expensed acquisition related costs of $6.0 million in 2013, which are included within general and administrative expenses in the Consolidated Statement of Income for the year ended December 31, 2013. Included within the purchase price allocation above for 2013 are certain indemnification assets and liabilities related to acquired businesses.

In connection with 2013 acquisitions, the Company has uncertain tax positions aggregating $6.9 million and contingent liabilities aggregating $17.3 million. The Company has been indemnified by the respective sellers for a portion of these acquired liabilities. As a result, an indemnification asset of $22.1 million was recorded. The reasonably possible range of acquisition related contingent liabilities that the Company estimates would be incurred is $22.5 million at the low end of the range to $24.2 million at the high end of the range.