Acquisitions and Divestitures

2016 Acquisitions

In the first quarter of 2016, we signed a definitive agreement to acquire from certain ExxonMobil affiliates their aviation fueling operations at more than 80 airport locations in Canada, the U.K., Germany, Italy, France, Australia and New Zealand. The total purchase price is approximately $260.0 million and is expected to be fully funded with cash on hand. On November 1, 2016, we completed the acquisition of the Canada locations and certain France locations. On December 1, 2016, we completed the acquisition of the U.K. locations and the remaining France locations. The remaining locations are expected to be completed during the first half of 2017. The transaction is subject to customary regulatory consents and closing conditions, including securing third party consents.

On July 1, 2016, we completed the acquisition of all of the outstanding capital stock of PAPCO and APP. PAPCO, headquartered in Virginia Beach, Virginia and APP, headquartered in Tacoma, Washington are leading distributors of gasoline, diesel, lubricants, propane and related services in the Mid-Atlantic and the Pacific Northwest region of the United States, respectively. These acquisitions combined with the Company’s existing land segment operations, will serve to further enhance our commercial and industrial platforms to deliver value-added solutions to customers across the United States.

In addition to the above acquisitions, we completed six acquisitions in our land segment in 2016 which were not significant individually or in the aggregate.

The following reconciles the estimated aggregate purchase price for the 2016 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):



Estimated purchase price	$	446.9
Less: Cash acquired	2.6
Estimated purchase price, net of cash acquired	444.3
Less: Amounts due to sellers and promissory notes issued	20.0
Cash paid for acquisition of businesses	$	424.3

The following table summarizes the aggregate consideration paid for all 2016 acquisitions and the provisional amounts of the assets acquired and liabilities assumed recognized at the acquisition date. The Company is in the process of finalizing the valuations of certain acquired assets and assumed liabilities; thus, the provisional measurements of these acquired assets and assumed liabilities are subject to change and will be finalized no later than one year from the acquisition date. The estimated purchase price allocation for the 2016 acquisitions is as follows (in millions):



Assets acquired:
Cash and cash equivalents	$	2.6
Accounts receivable	62.8
Inventories	39.0
Property and equipment	100.3
Other current assets	11.9
Goodwill and identifiable intangible assets	291.9
Other long-term assets	2.9
Liabilities assumed:
Accounts payable	(38.1		)
Accrued expenses and other current liabilities	(22.9		)
Non-current income tax liabilities and other long term liabilities	(3.5		)
Estimated purchase price	$	446.9

In connection with the 2016 acquisitions, we recorded goodwill of $173.3 million of which $133.4 million is anticipated to be deductible for tax purposes. All of the goodwill is attributable primarily to the expected synergies and other benefits that we believe will result from combining the operations of the acquired businesses with the operations of World Fuel Services' land and aviation segments. The identifiable intangible assets consisted of $105.1 million of customer relationships and $3.9 million of other identifiable intangible assets with weighted average lives of 5.6 years and 2.1 years, respectively, as well as $9.5 million of indefinite-lived trademark/trade name rights.

The following presents the unaudited pro forma results for 2016 and 2015 as if 2016 and 2015 acquisitions had been completed on January 1, 2015:



	2016		2015
	(pro forma)		(pro forma)
Revenue	$	27,925.0	$	32,604.4
Net income attributable to World Fuel	$	146.1	$	202.0

Earnings per common share:
Basic	$	2.11	$	2.88
Diluted	$	2.09	$	2.86

The financial position, results of operations and cash flows of the 2016 acquisitions have been included in our consolidated financial statements since their respective acquisition dates and did not have a significant impact on our revenue and net income for the year ended December 31, 2016.

Tobras Distribuidora de Combustiveis Limitada

On June 23, 2016, we acquired the remaining 49% of the outstanding equity interest of Tobras from the minority owners for an aggregate purchase price of approximately $3.7 million in cash (the “Tobras Acquisition”). Prior to the Tobras Acquisition, we owned 51% of the outstanding shares of Tobras and exercised control, and as such, we consolidated Tobras in our financial statements. As a result of the acquisition of the remaining equity interest of Tobras, we recorded a $10.9 million adjustment to capital in excess of par value on our consolidated balance sheets, which consisted of $3.7 million of cash paid and $7.2 million of non-controlling interest equity.

2016 Other transactions

Crude Oil Joint Venture Interests

In connection with the December 2016 bankruptcy filing of our former joint venture partner, we wrote off approximately $7.5 million of outstanding amounts owed to us by our former joint venture partner, during the three months ended December 31, 2016.

2015 Acquisitions

On September 1, 2015, we completed the acquisition of all of the outstanding stock of Pester, a leading distributor, transporter, and blender of branded motor fuels and lubricants to wholesale, industrial, commercial and agricultural customers. Pester is headquartered in Denver, Colorado and is also a leading operator of retail convenience stores in the Rocky Mountain region. In connection with the Pester acquisition, we committed to a plan to sell certain assets and liabilities of Pester’s fuel retail business. The assets and liabilities of the business were presented separately as held for sale in our consolidated balance sheets as of December 31, 2015. Current assets held for sale of the disposal group, which includes inventories and other current assets, were $5.5 million. The non-current assets held for sale, which include property and equipment, goodwill and identifiable intangible assets, were $36.5 million. Goodwill was subsequently adjusted from $5.9 million to $2.9 million within the one year purchase price allocation period. Current liabilities held for sale, which includes accounts payable and accrued expenses and other current liabilities, were $5.6 million. Non-current liabilities held for sale, comprised of deferred tax liabilities, were $5.0 million. These net assets were reported as part of our land segment. On May 1, 2016, we completed the sale of Pester's retail business for $32.3 million, resulting in a gain of $3.8 million, which is included in other income, net in the consolidated statement of income and comprehensive income.

In addition to the above acquisition, in 2015 we completed three acquisitions in our land segment and one acquisition in our aviation segment which were not material individually or in the aggregate.

The aggregate purchase price for the 2015 acquisitions was $102.3 million. The following reconciles the aggregate purchase price for the 2015 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):



Purchase price	$	102.3
Less: Cash acquired	8.7
Purchase price, net of cash acquired	93.6
Less: Amounts due to sellers and promissory notes issued	0.5
Cash paid for acquisition of businesses	$	93.1

The purchase price of the 2015 acquisitions was allocated to the assets acquired and liabilities assumed based on their fair value as of the acquisition date. The estimated purchase price allocation for the 2015 acquisitions is as follows (in millions):



Assets acquired:
Cash and cash equivalents	$	8.7
Accounts receivable	8.9
Inventories	7.4
Property and equipment	40.7
Identifiable intangible assets	25.9
Goodwill	39.4
Other current and long-term assets	31.1
Liabilities assumed:
Short-term debt	(0.5		)
Accounts payable	(10.7		)
Customer Deposits	(1.5		)
Accrued expenses and other current liabilities	(38.6		)
Non-current income tax liabilities and other long term liabilities	(8.5		)
Purchase price	$	102.3

In connection with the 2015 acquisitions, we recorded goodwill of $39.4 million of which $1.7 million is anticipated to be deductible for tax purposes. The identifiable intangible assets consisted of $18.1 million of customer relationships, $4.8 million of supplier relationships and $2.1 million of other identifiable intangible assets with weighted average lives of 5.3 years, 6.2 years and 3.4 years, respectively, as well as $0.9 million of indefinite-lived trademark/trade name rights.

The following presents the unaudited pro forma results for 2015 and 2014 as if the 2015 and 2014 acquisitions had been completed on January 1, 2014 (in millions, except per share data):



	2015		2014
	(pro forma)		(pro forma)
Revenue	$	30,952.0	$	44,432.0
Net income attributable to World Fuel	$	190.6	$	231.1

Earnings per common share:
Basic	$	2.71	$	3.26
Diluted	$	2.70	$	3.24

The financial position, results of operations and cash flows of the 2015 acquisitions have been included in our consolidated financial statements since their respective acquisition dates and did not have a significant impact on our revenue and net income for the 2015.

2014 Acquisitions

On March 7, 2014, we completed the acquisition of all of the outstanding stock of Watson Petroleum Limited (now known as WFL (UK) Limited) (“Watson Petroleum”) a leading distributor of gasoline, diesel, heating oil, lubricants and other products and related services. Watson Petroleum is headquartered in Brinkworth, England and is one of the largest fuel distributors in the U.K. The purchase price of Watson Petroleum was $164.3 million.

On July 29, 2014, we completed the acquisition of all of the outstanding stock of Colt International, L.L.C. (“Colt”) a leading provider of contract fuel and international trip planning services in the general aviation marketplace. Colt is headquartered in Houston, Texas and offers services at more than 3,000 locations. The purchase price of Colt was $72.9 million.

In addition to the above acquisitions, in 2014, we completed two acquisitions in our aviation segment and one acquisition in our marine segment, which were not material individually or in the aggregate.

The financial position, results of operations and cash flows of the 2014 acquisitions have been included in our consolidated financial statements since their respective acquisition dates.

The following reconciles the aggregate purchase price for the 2014 acquisitions to the cash paid for the acquisitions, net of cash acquired (in millions):



Purchase price	$	295.8
Less: Cash acquired	20.2
Purchase price, net of cash acquired	275.6
Less: Promissory notes issued	9.0
Less: Amounts due to sellers	3.4
Cash paid for acquisition of businesses	$	263.2

The purchase price for each of the 2014 acquisitions was allocated to the assets acquired and liabilities assumed based on their estimated fair value at the acquisition date. On an aggregate basis, the purchase price allocation for the 2014 acquisitions is as follows (in millions):



Assets acquired:
Cash and cash equivalents	$	20.2
Accounts receivable	257.9
Inventories	14.4
Property and equipment	55.9
Identifiable intangible assets	83.5
Goodwill	177.8
Other current and long-term assets	22.5
Liabilities assumed:
Accounts payable	(247.6		)
Accrued expenses and other current liabilities	(50.7		)
Other long-term liabilities	(18.7		)
Initial noncontrolling interest upon acquisition of businesses	(19.4		)
Purchase price	$	295.8

In connection with the acquisition of Watson Petroleum, we made a payment of £13.0 million ($21.7 million) to an escrow account related to an estimated assumed pension exit obligation and amounts due to sellers. During 2015, we completed the pension buy-out and the remaining escrow account balance of £3.4 million ($5.1 million) was paid to the sellers. As of December 31, 2015 we had an additional amount due to sellers of £2.1 million ($3.0 million) which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

For our 2014 acquisitions, we recorded goodwill of $177.8 million, of which $22.4 million is anticipated to be deductible for tax purposes. The aggregate identifiable intangible assets consisted of $55.5 million of customer relationships and $16.5 million of other identifiable intangible assets with weighted average lives of 4.9 years and 5.0 years, respectively, as well as $11.5 million of indefinite-lived trademark/trade name rights.