Acquisitions

Battery Acquisition - Subsequent to the quarter, on January 2, 2019, the Company completed its acquisition of Spectrum Brands Holdings, Inc.'s (Spectrum) global battery, lighting, and portable power business (Acquired Battery Business) with a contractual purchase price of $2,000.0, subject to certain purchase price adjustments (Battery Acquisition). The initial cash paid after contractual and estimated working capital adjustments was $1,956.2. Energizer funded the Battery Acquisition through net proceeds from the issuance of senior notes, term loans and cash on hand. See Note 9, Debt, for additional discussion on the senior notes and term loans issued and held in escrow at December 31, 2018.

Success fees of $13.0 were earned by financial advisers in January 2019 after closing the acquisition. This was in addition to the $2.0 paid in January 2018 for services rendered on the transaction.

On December 11, 2018, the European Commission approved the previously announced acquisition of the Acquired Battery Business conditioned on the divestiture of the Varta® consumer battery, chargers, portable power and portable lighting business in the Europe, Middle East and Africa region (EMEA), including manufacturing and distribution facilities in Germany. Energizer will retain the rights to the Varta brand in Latin America and Asia Pacific, as well as Spectrum’s global Rayovac®-branded consumer and hearing aid batteries business. Energizer began the formal divestiture process immediately after close and expects to complete the divestiture during the first half of calendar year 2019.

Auto Care Acquisition - On November 15, 2018, Energizer entered into a definitive acquisition agreement to acquire Spectrum’s global auto care business, including the Armor All®, STP®, and A/C PRO® brands (Acquired Auto Care Business) for a contractual purchase price of $1,250.0, subject to certain purchase price adjustments (Auto Care Acquisition). The contractual purchase price was comprised of $937.5 in cash and $312.5 of newly-issued Energizer common stock to Spectrum.

Subsequent to the quarter, on January 28, 2019, the Company completed its acquisition of the Acquired Auto Care Business. The initial cash paid after contractual and estimated working capital adjustments was $938.7. Per the acquisition agreement, the equity consideration to Spectrum was determined by dividing the contractually committed common stock amount of $312.5 by the volume weighted average sales price (VWAP) per share of the Company's common stock for the 10 consecutive trading days immediately preceding November 15, 2018, subject to certain potential adjustments under such agreement. As a result, 5.3 million shares were issued to Spectrum on January 28, 2019. The equity consideration paid to Spectrum was fair valued at $240.5 based on the 5.3 million shares at the Energizer closing stock price of $45.55 on January 28, 2019. In addition, per the terms of the agreement, additional consideration of $36.8 was included in the above cash consideration paid to Spectrum based on the difference between the 10 day VWAP and the 20 day VWAP beginning with the 10th trading day immediately preceding November 15, 2018.

The Company funded a portion of the cash consideration of the Auto Care Acquisition with the issuance of new senior notes and the issuance of common stock and Series A mandatory convertible preferred stock in January 2019. On January 17, 2019, the Company finalized pricing of a senior note offering due in 2027 of $600.0 at 7.750%. The notes priced at 100.0% of the principal amount. The notes are guaranteed, jointly and severally, on an unsecured basis, by each of the Company’s domestic restricted subsidiaries that is a borrower or guarantor under the 2018 Revolving Facility. The notes funded concurrently with the close of the Auto Care Acquisition on January 28, 2019. Refer to Note 11, Shareholders' Equity, for further information on the equity issuances.

Success fees of $6.0 were earned by a financial adviser in January 2019 after closing the acquisition. This was in addition to the $2.0 earned in November 2018 for services rendered on the transaction.

The Company incurred $51.3 and $5.7 of pre-tax acquisition and integration costs in the quarters ended December 31, 2018 and 2017, respectively. Pre-tax acquisition and integration costs of $18.9 and $5.7 were recorded in SG&A in the quarters ended December 31, 2018 and 2017, respectively, and primarily related to legal, consulting and advisory fees to assist with obtaining regulatory approval around the globe and to plan for the closing and integration of the Battery Acquisition and Auto Care Acquisition. Also included in the pre-tax acquisition costs for the quarter ended December 31, 2018 was $32.4 of interest expense, including ticking fees, related to the escrowed debt for the Battery Acquisition.

The Company recorded a pre-tax gain in Other items, net of $9.0 related to the favorable movement in the escrowed USD restricted cash held in our European Euro functional entity during the quarter ended December 31, 2018. The Company also recorded interest income in Other items, net of $5.8 earned on the Restricted cash funds held in escrow associated with the Battery Acquisition during the quarter ended December 31, 2018.

The preliminary purchase price allocation for the Battery Acquisition and Auto Care Acquisition are incomplete as of this filing date. Given the recent closure of the acquisitions, the Company is in the initial stages of the process to allocate the purchase price of the Battery Acquisition and the Auto Care Acquisition and does not yet have an initial allocation available.

Nu Finish Acquisition - On July 2, 2018, the Company acquired all of the assets of Reed-Union Corporation's automotive appearance business, including Nu Finish Car Polish and Scratch Doctor brands (Nu Finish acquisition). The acquisition purchase price of $38.1 was funded through a combination of cash on hand and committed debt facilities. The revenue in the quarter ended December 31, 2018 associated with the Nu Finish acquisition was $1.0 and earnings before income taxes was immaterial.

We have calculated fair values of assets and liabilities acquired for the Nu Finish acquisition based on our preliminary valuation analysis. For purposes of the allocation, the Company determined a preliminary fair value adjustment for inventory based on the estimated selling price of finished goods on hand at the closing date less the sum of (a) costs of disposal and (b) a reasonable profit allowance for the selling effort of the acquiring entity. The preliminary fair value adjustment for the inventory of $0.2 was recorded as expense to Cost of products sold in the fourth quarter 2018 as that inventory was sold. The preliminary fair values of the Nu Finish acquisition's identifiable intangible assets were estimated using variations of the income approach such as the relief from royalty method and the multi-period excess earnings method.

The preliminary purchase price allocation is as follows:



Accounts receivable	$	2.4
Inventory	0.9
Goodwill	14.7
Other identifiable intangible assets	21.8
Accounts payable	(1.7		)
Net assets acquired	$	38.1

The break out of purchased identifiable assets of $21.8 is included in the table below:



	Total		Weighted Average Useful Lives
Customer relationships	$	15.2	15.0
Trademarks	4.2		14.0
Proprietary formula	2.4		11.0
Total other intangible assets	$	21.8	14.4

The goodwill acquired in this acquisition is attributable to the workforce of the acquired business and the synergies expected to arise with this transaction. The acquired goodwill has been allocated to the Americas' reportable segment. The goodwill is deductible for tax purposes.