Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2021

Acquisitions

We account for business combinations using the acquisition method. Under the acquisition method of accounting, assets acquired and liabilities assumed from these operations are recorded at fair value on the date of acquisition. The condensed consolidated statements of operations include the results of operations for each acquired entity from the date of acquisition.

PAI, Midco Inc.

On April 1, 2021, we acquired 100% of the capital stock of PAI Midco, Inc., which directly or indirectly owns 100% of the ownership interests in four additional entities (collectively, "PAI"), for approximately $216 million. PAI was the largest privately-held provider of ATM services in the U.S. and generated approximately $95 million in revenues in 2020.

We have provisionally estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. The amounts reported are considered provisional as we are completing the valuations that are required to allocate the purchase price in areas such as intangible assets, property and equipment, lease-related assets and liabilities, deferred taxes and goodwill. As a result, the allocation of the provisional purchase price may change in the future.


(In millions)	Estimated Fair Value at Acquisition Date

Fair value of purchase consideration

Cash paid through September 30, 2021	$	215.5


Fair value of purchase consideration	$	215.5

Fair value of net assets acquired

Cash	$	12.3
Accounts receivable	7.3
Other current assets	5.1
Property and equipment, net	15.0
Intangible assets(a)	95.0
Goodwill(b)	127.4
Other noncurrent assets	4.5
Current liabilities	(41.2)
Other noncurrent liabilities	(9.9)
Fair value of net assets acquired	$	215.5

(a)Intangible assets are composed of customer relationships ($60 million fair value and 10 year amortization period), developed technology ($26 million fair value and 12 year amortization period) and a trade name ($9 million fair value and 5 year amortization period).

(b)Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating PAI's operations with our existing Brink's U.S. operations. All goodwill has been assigned to the North America reporting unit. We expect less than $2 million of goodwill to be deductible for tax purposes.

G4S plc ("G4S") Acquisitions

On February 26, 2020, we announced that we agreed to acquire the majority of the cash management operations of U.K.-based G4S, with closings planned in multiple phases in 2020. In March 2020, we acquired 100% of the capital stock of G4S International Logistics Group Limited ("G4Si"), a company which directly or indirectly owns controlling interests in multiple businesses providing secure international transportation of valuables. In the second quarter of 2020, we acquired cash management operations from G4S located in the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia, the Dominican Republic and the Philippines. In the third quarter of 2020, we acquired operations in Indonesia, Estonia, Latvia and Lithuania. In the first quarter of 2021, we acquired operations in Macau, Luxembourg and Kuwait, which completed the remaining planned G4S transactions. For the majority of the acquisitions in 2020 and the first quarter of 2021, we acquired 100% of the ownership interests. In Malaysia, the Dominican Republic, the Philippines, Indonesia and Kuwait, we acquired ownership interests of less than 100%. We believe that we meet the accounting criteria for consolidating these subsidiaries. In the aggregate, the purchase consideration for the G4S acquisitions in 2020 and the first nine months of 2021 is $837.1 million. We have also paid G4S approximately $114 million for net intercompany receivables from the acquired subsidiaries. The G4S businesses acquired generated approximately $800 million in annual revenues in 2019.

The contingent consideration noted in the following table below is related to the acquisition of the Malaysia operations. The consideration will be paid when minimum dividend distributions are received by Brink's relating to cash on the balance sheets of the Malaysia subsidiaries as of the acquisition date. We used a probability-weighted approach to estimate the fair value of the contingent consideration. The fair value of the contingent consideration reflected in the table below is the full $22 million that remains potentially payable as of September 30, 2021 as we believe it is unlikely that the contingent consideration payments will be reduced.

We finalized our purchase price accounting in the first nine months of 2021 for the businesses we acquired in the first nine months of 2020. For the remaining businesses acquired from G4S, we have provisionally estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. The amounts reported are considered provisional as we are completing the valuations that are required to allocate the purchase price in areas such as property and equipment, intangible assets, lease-related assets and liabilities, deferred taxes and goodwill. As a result, the allocation of the provisional purchase price may change in the future.


(In millions)	Estimated Fair Value at Acquisition Date

Fair value of purchase consideration

Cash paid through September 30, 2021	$	817.4
Contingent consideration	22.0
Liabilities assumed from seller	2.9
Indemnification asset	(5.2)
Fair value of purchase consideration	$	837.1

Fair value of net assets acquired

Cash	$	244.4
Restricted cash	30.1
Accounts receivable	145.8
Other current assets	30.8
Property and equipment, net	123.8
Right-of-use assets, net	77.5
Intangible assets(a)	206.0
Goodwill(b)	535.9
Other noncurrent assets	16.2
Current liabilities	(296.2)
Lease liabilities	(68.1)
Other noncurrent liabilities	(92.7)
Fair value of net assets acquired	$	953.5
Less: Fair value of noncontrolling interest	(116.4)
Fair value of purchase consideration	$	837.1

(a)Intangible assets are composed of customer relationships ($206 million fair value and 15 year amortization period).

(b)Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating G4S operations with our existing operations. Goodwill has been provisionally assigned to the Europe reporting unit ($191 million), the Rest of World reporting unit ($342 million) and the Latin America reporting unit ($3 million). We do not currently expect goodwill in these reporting units to be deductible for tax purposes.

Actual and Pro forma disclosures

Below are the actual results included in Brink's consolidated results for the businesses we acquired in 2020 and the first nine months of 2021.


(In millions)	Revenue		Net income (loss) attributable to Brink's

Three months ended September 30, 2021
PAI	$	33.5	2.9
G4S	172.6		4.9

Total	$	206.1	7.8

Three months ended September 30, 2020

G4S	156.1		5.2

Total	$	156.1	5.2

Nine months ended September 30, 2021
PAI	$	67.5	5.4
G4S	501.0		9.1

Total	$	568.5	14.5

Nine months ended September 30, 2020

G4S	285.0		8.2

Total	$	285.0	8.2

The pro forma consolidated results of Brink’s presented below reflect a hypothetical ownership as of January 1, 2019 for the businesses we acquired during 2020 and a hypothetical ownership as of January 1, 2020 for the businesses we acquired in the first nine months of 2021.


(In millions)	Revenue		Net income (loss) attributable to Brink's

Pro forma results of Brink's for the three months ended September 30,
2021
Brink's as reported	$	1,075.5	19.0



Total	$	1,075.5	19.0

2020
Brink's as reported	$	970.5	(23.9)
PAI(a)	25.2		0.5
G4S(a)	19.4		0.2

Total	$	1,015.1	(23.2)

Pro forma results of Brink's for the nine months ended September 30,
2021
Brink's as reported	$	3,102.0	55.6
PAI(a)	31.4		2.5
G4S(a)	7.0		0.7

Total	$	3,140.4	58.8

2020
Brink's as reported	$	2,669.3	(9.2)
PAI(a)	69.4		0.9
G4S(a)	233.4		(0.7)

Total	$	2,972.1	(9.0)

(a)Represents amounts prior to acquisition by Brink's.

Acquisition costs

We have incurred $5.4 million in transaction costs related to business acquisitions in the first nine months of 2021 (compared to $17.7 million in the first nine months of 2020). These costs are classified in the condensed consolidated statements of operations as selling, general and administrative expenses.

Dispositions

On January 1, 2020, we sold 100% of our ownership interest in a French security services company for a net sales price of approximately $11 million. We recognized a $4.7 million gain in the first nine months of 2020 related to the sale of this business, which is reported in interest and other nonoperating income (expense) in the condensed consolidated statements of operations. The French security services company was part of the Europe reportable segment and reported revenues of $3 million in 2019.