Note 16: Acquisitions and Divestitures

BUSINESS ACQUISITIONS

2018 BUSINESS ACQUISITIONS — Through the nine months ended September 30, 2018, we purchased the following operations for total consideration of $216,581,000:

Alabama — aggregates, asphalt mix and construction paving operations

California — asphalt mix operations

Texas — aggregates rail yards, asphalt mix and construction paving operations

The 2018 acquisitions listed above are reported in our condensed consolidated financial statements as of their respective acquisition dates. None of these acquisitions are material to our results of operations or financial position either individually or collectively. The fair value of consideration transferred for these acquisitions and the preliminary amounts (pending appraisals for intangible assets and property, plant & equipment) of assets acquired and liabilities assumed, are summarized below:



	September 30
in thousands	2018
Fair Value of Purchase Consideration
Cash	$ 207,081
Payable to seller	9,500
Total fair value of purchase consideration	$ 216,581
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net	$ 16,434
Inventories	11,904
Other current assets	932
Property, plant & equipment	145,935
Other intangible assets
Contractual rights in place	41,497
Deferred income taxes, net	(34,808)
Liabilities assumed	(11,615)
Net identifiable assets acquired	$ 170,279
Goodwill	$ 46,302

As a result of the 2018 acquisitions, we recognized $41,497,000 of amortizable intangible assets (contractual rights in place). The contractual rights in place will be amortized against earnings ($40,417,000 – straight-line over a weighted-average 20 years and $1,080,000 – units of sales over an excess of 30 years) of which $4,720,000 will be deductible for income tax purposes over 15 years. Of the $46,302,000 of goodwill noted above (none of which will be deductible for income tax purposes), $34,808,000 represents the balance of deferred tax liabilities generated from carrying over the seller’s tax basis in the assets acquired.

2017 BUSINESS ACQUISITIONS — For the full year 2017, we purchased the following operations for total consideration of $842,013,000 ($822,432,000 cash, $9,681,000 payable, $9,900,000 fair value of assets swapped), less $287,292,000 cash received for assets divested immediately upon acquisition as required by the Department of Justice:

Arizona — asphalt mix operations

California — aggregates and ready-mixed concrete operations

Florida — aggregates operations

Georgia — aggregates operations

Illinois — aggregates operations

New Mexico — aggregates operations

South Carolina — aggregates operations

Tennessee — aggregates, asphalt mix and construction paving operations

Virginia — aggregates and ready-mixed concrete operations

The fair value of consideration transferred for the 2017 acquisitions considered to be material, and the preliminary amounts at December 31, 2017 (immaterial adjustments were recorded in the first and second quarters of 2018 including an increase to goodwill of $992,000) of assets acquired and liabilities assumed, are summarized below:



	December 31
in thousands	2017
Fair Value of Purchase Consideration
Cash	$ 1,072,978
Payable to seller	7,837
Total fair value of purchase consideration	$ 1,080,815
Identifiable Assets Acquired and Liabilities Assumed
Accounts and notes receivable, net	$ 14,955
Inventories	21,679
Other current assets	608
Investments	3,590
Property, plant & equipment	433,606
Other intangible assets
Contractual rights in place	295,482
Liabilities assumed	(3,894)
Net identifiable assets acquired	$ 766,026
Goodwill	$ 27,497
Net Assets Divested Immediately Upon Acquisition	$ 287,292

As a result of the 2017 acquisitions, we recognized $309,112,000 of amortizable intangible assets ($309,012,000 contractual rights in place and $100,000 other intangibles). The contractual rights in place will be amortized against earnings ($73,879,000 – straight-line over a weighted-average 19.3 years and $235,133,000 – units of sales over an estimated 54.7 years) and deductible for income tax purposes over 15 years.

DIVESTITURES AND PENDING DIVESTITURES

In the first quarter of 2018, we sold:

ready-mixed concrete operations in Georgia resulting in a pretax gain of $2,929,000 (we retained all real property which is leased to the buyer, and obtained a long-term aggregates supply agreement)

In 2017, we sold:

Fourth quarter — swapped ready-mixed concrete operations in Arizona (fair value of $9,900,000 and book value of $1,879,000) for an asphalt mix operation in Arizona resulting in a pretax gain of $8,021,000

Fourth quarter — as required by the Department of Justice, we immediately divested certain assets obtained in the Aggregates USA acquisition resulting in no gain

No assets met the criteria for held for sale at September 30, 2018, December 31, 2017 or September 30, 2017.