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Business combinations
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Business combinations
20.
Business combinations
The following table presents cash paid for acquisitions, net of cash acquired:
(in millions)
Year ended December 31, 2017
VWR
$
6,579.8

Other
80.9

Total
$
6,660.7


VWR
On November 21, 2017, we acquired VWR. We determined that we were the accounting acquirer because: (i) we obtained control of VWR by transferring cash to purchase all of VWR’s issued and outstanding shares of common stock, and (ii) we satisfied all but one of the other qualitative criteria provided under GAAP.
VWR was a global manufacturer and distributor of laboratory and production products and services. We acquired VWR to improve our access to certain customers and geographies, to create a robust offering for the entire biopharmaceutical value chain and to generate significant cost synergies. We incurred transaction costs of $40.7 million in 2017 to complete the acquisition, excluding fees paid to New Mountain Capital and to refinance our debt and equity. The transaction costs are included in selling, general and administrative expenses on our statement of operations.
The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed:
(in millions)
November 21, 2017
Accounts receivable
$
784.9

Inventory
585.3

Other current assets
24.3

Property, plant and equipment
457.1

Goodwill
2,581.3

Other intangible assets
4,534.1

Other assets
69.3

Accounts payable
(455.1
)
Other current liabilities
(295.8
)
Finance lease liabilities
(67.9
)
Deferred income tax liabilities
(1,486.0
)
Other liabilities
(151.7
)
Total
$
6,579.8


The purchase price was allocated to identifiable assets acquired and liabilities assumed based on their fair value. The fair value of inventory was determined using a comparative sales method that stated inventory at its expected selling price less estimated selling costs and a reasonable profit on the selling effort, a level 3 measurement. The fair value of property, plant and equipment was determined at the individual asset level using a combination of cost, sales and income approaches, which we consider to be level 3 measurements. The fair value of other intangible assets was determined as follows:
Customer relationships were valued using the income approach, a level 3 measurement that assumed a weighted-average discount rate of 9.9% and a customer retention rate of 98%.
The VWR trade name was valued using the relief-from-royalty method, a level 3 measurement that assumed a weighted-average royalty rate of 2.2%.
Other identifiable intangible assets were valued primarily using a replacement cost method, a level 3 measurement.
The fair values of all other identifiable assets acquired and liabilities assumed were primarily based on their carrying values, which we consider to be level 2 measurements.
The purchase price for VWR was higher than the fair value of the acquired identifiable assets, resulting in goodwill, due to the value of anticipated commercial and cost synergies, the existence of intangible assets not recognizable under GAAP and other market factors. On October 1, 2018, we allocated goodwill of $1,412.1 million to the Americas, $1,156.9 million to Europe and $12.3 million to AMEA based on measurements performed on the acquisition date. We did not record any goodwill that we expect to be deductible for tax purposes.
The following table presents information about acquired identifiable intangible assets:
(dollars in millions)
Fair value
 
Weighted average estimated life
Customer relationships
$
4,160.0

 
20.0 years
VWR trade name
270.0

 
6.4 years
Other
104.1

 
7.9 years
Total
$
4,534.1

 
18.9 years

Our 2017 results included net sales of $552.0 million and operating loss of $39.4 million from VWR.
The following table presents unaudited supplemental pro forma financial information as if the VWR acquisition had occurred on January 1, 2016:
(in millions)
Year ended December 31, 2017
Net sales
$
5,398.7

Net loss
(120.8
)

The pro forma financial information presented above has been prepared by combining our historical results and the historical results of VWR and further reflects the effect of purchase accounting adjustments. These results do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated above, or that may result in the future, and does not reflect potential synergies.
Other
Except for their impact on investing cash flows, no other business combinations nor their related costs were material individually or in the aggregate.