Note 11 – Acquisition of Construction Services Business

In November 2017, the Company, through its subsidiaries, led principally by Centuri, completed the acquisition of a privately held construction business, New England Utility Constructors, Inc. (“Neuco”) for approximately $99 million, less assumed debt. See the Company’s 2017 Form 10-K for additional information about this acquisition.

Assets acquired and liabilities assumed in the transaction were recorded, generally, at their acquisition date fair values. Transaction costs associated with the acquisition were expensed as incurred. The Company’s allocation of the purchase price was based on an evaluation of the appropriate fair values and represented management’s best estimate based on available data (including market data, data regarding customers of the acquired businesses, terms of acquisition-related agreements, analysis of historical and projected results, and other types of data). The analysis included consideration of types of intangibles that were acquired, including non-competition agreements, customer relationships, trade names, and work backlog. The final purchase accounting has been completed.

The estimated fair values of assets acquired and liabilities assumed as of November 1, 2017, are as follows (in millions of dollars):


	Acquisition Date			Measurement Period Adjustments			Revised Acquisition Date
Cash and cash equivalents	$	0.8		$	—		$	0.8
Contracts receivable		18.3			—			18.3
Other receivables		5.4			—			5.4
Property, plant and equipment		15.1			—			15.1
Prepaid expenses and deposits		1.7			(0.1	)		1.6
Intangible assets		44.8			—			44.8
Goodwill		32.0			0.2			32.2

Total assets acquired		118.1			0.1			118.2
Current liabilities		(18.5	)		(0.1	)		(18.6	)
Other long-term liabilities		(0.3	)		—			(0.3	)

Net assets acquired	$	99.3		$	—		$	99.3

The Company incurred and expensed acquisition costs of $2.6 million for the twelve months ended March 31, 2018. No acquisition-related costs were incurred during the three months ended March 31, 2018.

The allocation of the purchase price of Neuco was accounted for in accordance with applicable accounting guidance. Goodwill, which is generally not deductible for tax purposes, consists of the value associated with the assembled workforce and consolidation of operations. However, as the business of Neuco was acquired via asset purchase for tax purposes, the approximately $32 million of tax-basis goodwill is expected to be deductible for tax purposes. In the first quarter of 2018, values at the acquisition date were adjusted as reflected in the table above, with no significant overall impact to the Company’s consolidated balance sheets.