Acquisitions

12 Months Ended

Dec. 31, 2021

Boral Target Companies in North America.

On June 20, 2021, the Company, through a wholly-owned subsidiary, entered into an Equity Purchase Agreement (the "Boral Purchase Agreement") by and among Boral Building Products Inc., a Michigan corporation, Boral Stone Products LLC, a Delaware limited liability company, Boral Lifetile Inc., a California corporation, Boral Windows LLC, a Utah limited liability company, Boral Industries Inc., a California corporation ("Boral Industries"), and solely for the limited purposes set forth therein, the Company, and Boral Limited, an Australian corporation ("Boral"). Pursuant to the terms of the Boral Purchase Agreement, the Company agreed to acquire from Boral Industries all of the issued and outstanding equity interests of certain subsidiaries of Boral Industries engaged in Boral's North American building products businesses in roofing, siding, trim and shutters, decorative stone and windows (the "Boral Target Companies") for a purchase price of $2,150 in cash, subject to working capital post-closing adjustments. The Boral Purchase Agreement also includes a potential earn-out payment from the Company to Boral Industries of up to $65 if the windows division of the Boral Target Companies generates EBITDA in excess of a specified target in its fiscal year ending June 30, 2024. On October 1, 2021, the Company completed its acquisition of, Boral Target Companies (the "Boral Acquisition") for a total purchase price of $2,132 in an all-cash transaction and accounted for the acquisition under the business combination method in accordance with Accounting Standard Codification Topic 805 ("ASC 805"), Business Combinations. The Boral Target Companies acquisition is consistent with the Company's vertical integration strategy of enhancing margin stability and downstream products. The additional product lines through the acquisition will broaden the Company's footprint in the fast-growing housing markets in North America. The assets acquired and liabilities assumed and the results of operations of Boral Target Companies are included in the Housing and Infrastructure Products segment.

A summary of the purchase consideration follows:


Base purchase price	$	2,150
Net working capital adjustment	(2)
Closing indebtedness	(16)
Total purchase price consideration	$	2,132

For the year ended December 31, 2021, the Company recognized acquisition-related costs of $17 for advisory, consulting and professional fees, and other expenses that were expensed as restructuring, transaction and integration-related costs as a component of the income from operations.

The following table summarizes the fair value of identified assets acquired and liabilities assumed at the date of acquisition. The preliminary allocation of consideration transferred is based on management's estimates, judgments and assumptions. These estimates, judgments and assumptions are subject to change upon final valuation and should be treated as preliminary values. Management estimated that consideration paid exceeded the fair value of the net assets acquired. Therefore, goodwill of $771 was recorded, most of which will not be deductible for income tax purposes. The goodwill is assigned to the Company's Housing and Infrastructure Products segment. The final allocation of purchase consideration could include changes in the estimated fair value of (1) inventories; (2) property, plant and equipment; (3) intangible assets comprising of customer relationships, trade names, developed technologies; (4) deferred income taxes; and (5) other assets.

The information below represents the purchase price allocation:


Cash	$	5
Accounts receivable	119
Inventories	156
Prepaid expenses and other current assets	3

Property, plant and equipment	489
Operating lease right-of-use assets	87
Intangible assets	952
Other assets	18
Total assets acquired	1,829
Accounts payable	46
Accrued and other liabilities	103
Deferred income taxes	244
Operating lease liabilities	73
Other liabilities	2
Total liabilities assumed	468
Total identifiable net assets acquired	1,361
Goodwill	771
Total purchase consideration	$	2,132

The excess of the total equity value of Boral based on the purchase consideration over net assets acquired was recorded as goodwill. The goodwill is primarily attributable to the synergies expected to arise after the acquisition. The synergies relate to enhanced leading positions in the home building products and materials sector and increased margin stability.

The following table summarizes the components of identifiable intangible assets acquired and their estimated useful lives as of the acquisition date:


	Fair Value		Remaining Useful Life (in years)
Trade name	$	200	21 - 22
Technology	107		20 - 22
Customer relationships	645		12 - 22
Total Identified Intangible Assets	$	952

There are no indefinite-lived intangible assets derived acquired as a result of the Boral Target Companies acquisition. Definite lived intangible assets acquired as a result of the Boral acquisition are amortized on a straight-line basis to reflect the pattern in which the economic benefits of the intangible assets are realized.

The fair value for Trade name and Technology were estimated using the income approach, specifically the relief-from-royalty method which estimates the cost savings that accrue to the owner of the intangible assets that would otherwise be payable as royalties or licenses fees on revenues earned through the use of the asset. The fair value of Customer Relationships was estimated using the multi-period excess earnings method. The excess earning method model estimates revenues and cash flows derived from the asset and then deducts portions of the cash flow that can be attributed to supporting assets. The resulting cash flow, which is attributable solely to the asset acquired, is then discounted at a rate of return commensurate with the risk of the asset to calculate the present value.

Unaudited Pro Forma Financial Information

The acquired Boral Target Companies contributed net revenues and net loss of $275 and $15, respectively, to the Company for the period from October 1, 2021 to December 31, 2021. The following unaudited pro forma summary presents the results of operations as if the acquisition of Boral Target Companies occurred on January 1, 2020:


	2021		2020
Revenues	$	12,653	$	8,553
Net income attributable to Westlake Corporation	$	2,035	$	268

The amounts have been calculated after applying the Company's accounting policies and adjusting the results of Boral Target Companies to reflect additional depreciation, amortization, and other purchase accounting adjustment assuming the fair value adjustments to the property and equipment and intangibles assets and other purchase accounting adjustments have been applied on January 1, 2020. The pro forma amounts do not include any potential synergies, cost savings or other expected benefits of the acquisition, and are presented for illustrative purposes only and are not necessarily indicative of results that would have been achieved if the acquisition had occurred as of January 1, 2020 or of future operating performance.

LASCO Fittings, Inc.

On July 4, 2021, the Company, through a wholly-owned subsidiary, entered into an Equity Purchase Agreement with Aalberts U.S. Holding Corp., a Delaware corporation ("Aalberts") and wholly-owned subsidiary of Aalberts N.V., pursuant to which, the Company, agreed to acquire LASCO Fittings, Inc., a Delaware corporation ("LASCO"), from Aalberts. LASCO is a manufacturer of injected-molded PVC fittings that serve the plumbing, pool and spa, industrial, irrigation and retail markets in the United States. On August 19, 2021, the Company completed its acquisition of, and acquired all of the equity interests in, LASCO (the "LASCO Acquisition"). The total closing purchase consideration was $277. The acquisition is being accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of LASCO are included in the Housing and Infrastructure Products segment. LASCO net sales and net income since the acquisition date and the acquisition-related costs recognized in the consolidated statement of operations for the year ended December 31, 2021 were not material to the Company's consolidated statement of operations. The pro forma impact of this acquisition has not been presented as it is not material to the Company's consolidated statements of operations for the years ended December 31, 2021 and 2020. The Company recognized intangible assets of $77, of which $50 is included in customer relationships, net on the Company's consolidated balance sheets as of December 31, 2021, and goodwill of $106 with the remainder of the purchase consideration primarily allocated to property, plant, and equipment, net and working capital balances. The goodwill is expected to be deductible for income tax purposes. The goodwill recognized is primarily attributable to the expected value to be achieved from the acquisition synergies. The intangible assets that have been acquired are being amortized over a period of 17 to 18 years.

Dimex LLC.

On August 2, 2021, the Company, through a wholly-owned subsidiary, entered into a Stock Purchase Agreement with DX Acquisition Corp., a Delaware corporation ("Dimex"), each of Dimex's stockholders, and for limited purposes, the Company and Grey Mountain Partners Fund III Holdings, L.P., pursuant to which the Company agreed to acquire Dimex. Dimex is a producer of various consumer products made from post-industrial-recycled polyvinyl chloride, polyethylene and thermoplastic elastomer materials, including landscape edging; industrial, home and office matting; marine dock edging; and masonry joint controls. On September 10, 2021, the Company completed its acquisition of, and acquired all of the equity interests in, Dimex (the "Dimex Acquisition" and, together with the Boral Acquisition and the LASCO Acquisition, the "2021 Acquisitions"). The total closing purchase consideration was $172. The acquisition is being accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed and the results of operations of Dimex are included in the Housing and Infrastructure Products segment. Dimex net sales and net income since the acquisition date and the acquisition-related costs recognized in the consolidated statement of operations for the year ended December 31, 2021 were not material to the Company's consolidated statement of operations. The pro forma impact of this acquisition has not been presented as it is not material to the Company's consolidated statements of operations for the years ended December 31, 2021 and 2020. The Company recognized intangible assets of $69, of which $45 is included in customer relationships, net on the Company's consolidated balance sheets as of December 31, 2021, and goodwill of $66, most of which will not be deductible for income tax purposes, with the remainder of the purchase consideration primarily allocated to property, plant, and equipment, net and working capital balances. The goodwill is primarily attributable to the expected value to be achieved from the acquisition synergies. The intangible assets that have been acquired are being amortized over a period of 17 to 19 years.

Hexion Epoxy Business.

On November 24, 2021, the Company, through a wholly-owned subsidiary, entered into a Stock Purchase Agreement (the "Hexion Purchase Agreement") by and among Hexion Inc. ("Hexion"), an Ohio corporation, and solely for the limited purposes set forth therein, the Company. Pursuant to the terms of the Hexion Purchase Agreement, the Company agreed to acquire Hexion's global epoxy business for a purchase price of approximately $1,200 in cash, subject to certain closing date adjustments as set forth in the Hexion Purchase Agreement (the "Hexion Acquisition"). On February 1, 2022, the Company completed the acquisition of, and acquired all of the equity interests in, the Hexion Acquisition. The assets acquired and liabilities assumed and the results of operations of Hexion's global epoxy business will be included in the Performance and Essential Materials segment. Due to the recent closing of this acquisition, certain financial information related to this acquisition, including the fair value of total consideration transferred or estimated to be transferred, is not yet finalized.