ACQUISITIONS

9 Months Ended

Sep. 30, 2019

ACQUISITIONS

ACQUISITIONS

NOTE 18 – ACQUISITIONS

On August 2, 2019, we completed our asset acquisition (the “Bapco Acquisition”) of the remaining 80% ownership interest in the capital stock of Bapco Closures Holdings Limited (“Bapco”), for $3.8 million (net of $2.9 million of cash acquired). The 20% ownership investment previously held in Bapco is now included within the intangible assets acquired. Bapco, located in Horesell, UK, provides innovative closures sealing technology that provides package integrity and tamper evidence. The results of Bapco’s operations have been included in the Condensed Consolidated Financial Statements within our Food + Beverage segment since the date of acquisition.

During August 2019, we also invested an aggregate amount of $3.5 million in two preferred equity investments that are accounted for at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. There were no indications of impairment nor were there any changes from observable price changes noted in the three months ended September 30, 2019.

On June 5, 2019, we completed our acquisition (the “Nanopharm Acquisition”) of all of the outstanding capital stock of Nanopharm Ltd. (“Nanopharm”). Nanopharm, located in Newport, UK, is a science-driven, leading provider of orally inhaled and nasal drug product design and development services. The purchase price was approximately $38.1 million (net of $1.8 million of cash acquired) and was funded by cash on hand. The results of Nanopharm’s operations have been included in the Condensed Consolidated Financial Statements within our Pharma segment since the date of acquisition. We are in the process of finalizing purchase accounting.

On May 31, 2019, we completed our acquisition (the “Gateway Acquisition”) of all of the outstanding equity interests of Gateway Analytical LLC (“Gateway”). Gateway, located in Gibsonia, PA, provides industry-leading particulate detection and predictive analytical services to customers developing injectable medicines. The purchase price was approximately $7.0 million and was funded by cash on hand. As part of the Gateway Acquisition, we are also obligated to pay to the selling equityholder of Gateway certain contingent consideration based on 2020 and 2022 performance targets defined in the purchase agreement. Based on projections as of the acquisition date, we estimated the aggregate fair value for this contingent consideration arrangement to be $3.0 million. We are in the process of finalizing purchase accounting. The results of Gateway’s operations have been included in the Condensed Consolidated Financial Statements within our Pharma segment since the date of acquisition.

On August 27, 2018, we completed our acquisition (the “CSP Technologies Acquisition”) of all of the outstanding capital stock of CSP Technologies S.à r.l. (“CSP Technologies”). CSP Technologies is a leader in active packaging technology based on proprietary material science expertise for the pharma and food service markets. CSP Technologies operates two manufacturing locations in the U.S. and one in France. The purchase price was approximately $553.5 million and was funded by cash on hand. At acquisition, we maintained $5.0 million in an escrow account and classified this amount as restricted cash pending the finalization of a working capital adjustment. These funds were released from restriction in January 2019, which resulted in a refund of $964 thousand and a corresponding reduction of our purchase price and the associated goodwill balance in the amount of the refund.

The following table summarizes the assets acquired and liabilities assumed related to the CSP Technologies Acquisition as of the acquisition date at estimated fair value.

	August 27, 2018
Assets
Cash and equivalents	$	24,053
Accounts receivable		20,847
Inventories		42,169
Prepaid and other		3,995
Property, plant and equipment		99,194
Goodwill		278,020
Intangible assets		177,120
Other miscellaneous assets		1,039
Liabilities
Current maturities of long-term obligations		129
Accounts payable and accrued liabilities		31,989
Long-term obligations		6,037
Deferred income taxes		38,442
Retirement and deferred compensation plans		1,038
Deferred and other non-current liabilities		15,344
Net assets acquired	$	553,458

The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date related to the CSP Technologies Acquisition:

	Weighted-Average	Estimated
	Useful Life	Fair Value
	(in years)	of Asset
Acquired technology	12	$	46,700
Customer relationships	16		113,300
Trademarks and trade names	9		14,600
License agreements and other	11		2,520
Total		$	177,120

Goodwill, net of working capital settlement, in the amount of $277.1 million was recorded for the CSP Technologies Acquisition, of which $173.4 million and $103.7 million is included in the Pharma and Food + Beverage segments, respectively. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill largely consists of leveraging our commercial presence in selling the CSP Technologies line of products in markets where CSP Technologies did not previously operate and the ability of CSP Technologies to maintain its competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. We do not expect any of the goodwill will be deductible for tax purposes.

The unaudited pro forma results presented below include the effects of the CSP Technologies Acquisition as if it had occurred as of January 1, 2017. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as intangible asset amortization, fair value adjustments for inventory and financing costs related to the change in our debt structure. The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the date indicated.

		Three Months Ended		Nine Months Ended
		September 30, 2018		September 30, 2018
Net Sales	$	687,201	$	2,172,737
Net Income Attributable to AptarGroup Inc.		48,034		158,527
Net Income per common share — basic		0.77		2.54
Net Income per common share — diluted		0.74		2.45

On May 1, 2018, we acquired 100% of the common stock of Reboul SAS (“Reboul”), a French manufacturer specializing in stamping, decorating and assembling metal and plastic packaging for the cosmetics and luxury markets, for a purchase price of approximately $3.6 million (net of $112 thousand of cash acquired). The results of Reboul’s operations have been included in the Condensed Consolidated Financial Statements within our Beauty + Home segment since the date of acquisition.

In May 2018, we invested $10.0 million in preferred equity stock of Reciprocal Labs Corporation, doing business as Propeller Health (“Reciprocal Labs”), which was accounted for at cost. No impairment charges were recorded during 2018 or 2019 against this investment. During the fourth quarter of 2018, we recorded a gain of approximately $6.5 million by adjusting the carrying amount to its expected proceeds as this investment was ultimately sold during January 2019.