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Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2021
Acquisitions and Divestitures |
Acquisitions and Divestitures | 17. Acquisitions and Divestitures Acquisitions We continue to pursue the acquisition of businesses that are accretive to our Solid Waste business and enhance and expand our existing service offerings. Our acquisitions for the reported periods are discussed below: 2021 Acquisitions During the year ended December 31, 2021, we acquired 11 businesses primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $94 million, which included $73 million in net cash paid and $21 million of other consideration, primarily purchase price holdbacks and the settlement of a preexisting promissory note with one of the acquired businesses. In addition, we paid $3 million of holdbacks, primarily related to current year acquisitions. Our 2021 acquisitions discussed above include our acquisition of the remaining ownership interest in a waste diversion technology company. Concurrent with our acquisition, the acquired entity issued shares to an unrelated third-party, diluting our ownership interest. We determined the entity constituted a variable interest entity and concluded that we did not have the power to direct its significant activities. As a result, we subsequently deconsolidated the entity and account for our remaining ownership interest as an equity method investment. 2020 Acquisitions During the year ended December 31, 2020, we acquired four businesses related to our Solid Waste business, including the acquisition of Advanced Disposal discussed further below. Total consideration, net of cash acquired of $36 million, for all acquisitions was $4.1 billion, none of which related to other consideration such as purchase price holdbacks. In 2020, we paid $3 million of holdbacks, all of which related to prior year acquisitions. Contingent consideration obligations are primarily based on achievement by the acquired businesses of certain negotiated goals, which generally include targeted financial metrics. Advanced Disposal — On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020. Total enterprise value of the acquisition was $4.6 billion when including approximately $1.8 billion of Advanced Disposal’s net debt. This acquisition grew our footprint and allows us to provide differentiated, sustainable waste management and recycling services to approximately three million new commercial, industrial and residential customers, primarily located in the Eastern half of the U.S. The acquisition was funded using a $3.0 billion, 364-day, U.S. revolving credit facility and our commercial paper program. In November 2020, we issued $2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the $3.0 billion, 364-day, U.S. revolver and terminated the facility. For the year ended December 31, 2021, we incurred $51 million of integration related costs, and for the year ended December 31, 2020, we incurred $156 million of acquisition and integration related costs, which were primarily classified as “Selling, general and administrative expenses.” The post-closing operating results of Advanced Disposal have been included in our consolidated financial statements, within our existing reportable segments. Post-closing through December 31, 2020, Advanced Disposal recognized $205 million, $142 million and $60 million of revenue, operating expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement of Operations. Our consolidated financial statements have not been retroactively restated to include Advanced Disposal’s historical financial position or results of operations. The acquisition was accounted for as a business combination. In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. The Company valued the customer relationship asset using an income approach; specifically, the multi-period excess earnings method. The significant assumptions used to value customer relationships included, among others, attrition rates, revenue growth rate, and discount rate. The Company valued the landfill assets using an income approach; specifically, the multi-period excess earnings method. The significant assumptions used to value landfill assets included, among others, the forecasted revenue and revenue growth (including forecasted waste volumes and rate per ton), discount rate, and forecasted capital expenditures. The allocation of the purchase price was finalized in October 2021. Goodwill of $2.5 billion was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits expected to arise from other assets acquired that could not be individually identified and separately recognized. Goodwill has been assigned to our reporting units that have integrated these operations as they are benefitting from the synergies of the combination. Goodwill related to this acquisition is not deductible for income tax purposes. The following table shows the purchase price allocation as of the date acquired, and adjustments to October 30, 2021 (in millions):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | October 30, 2020 | ​ | ​ | Adjustments | ​ | ​ | October 30, 2021
Accounts and other receivables | ​ | $ | 159 | ​ | $ | 1 | ​ | $ | 160
Parts and supplies |  |  | 8 |  |  | (1) | ​ |  | 7
Other current assets | ​ | ​ | 17 | ​ | ​ | (1) | ​ | ​ | 16
Assets held for sale (a) | ​ | ​ | 1,022 | ​ | ​ | — | ​ | ​ | 1,022
Property and equipment | ​ | ​ | 1,278 | ​ | ​ | (12) | ​ | ​ | 1,266
Goodwill | ​ | ​ | 2,470 | ​ | ​ | 26 | ​ | ​ | 2,496
Other intangible assets | ​ | ​ | 604 | ​ | ​ | (3) | ​ | ​ | 601
Investments in unconsolidated entities | ​ | ​ | 9 | ​ | ​ | — | ​ | ​ | 9
Other assets | ​ | ​ | 27 | ​ | ​ | (2) | ​ | ​ | 25
Accounts payable | ​ | ​ | (107) | ​ | ​ | 1 | ​ | ​ | (106)
Accrued liabilities | ​ | ​ | (155) | ​ | ​ | (3) | ​ | ​ | (158)
Deferred revenues | ​ | ​ | (19) | ​ | ​ | — | ​ | ​ | (19)
Current portion of long-term debt | ​ | ​ | (12) | ​ | ​ | — | ​ | ​ | (12)
Liabilities held for sale (a) | ​ | ​ | (234) | ​ | ​ | — | ​ | ​ | (234)
Long-term debt, less current portion (b) | ​ | ​ | (441) | ​ | ​ | — | ​ | ​ | (441)
Landfill and environmental remediation liabilities | ​ | ​ | (242) | ​ | ​ | (13) | ​ | ​ | (255)
Deferred income taxes | ​ | ​ | (223) | ​ | ​ | 9 | ​ | ​ | (214)
Other liabilities | ​ | ​ | (79) | ​ | ​ | (2) | ​ | ​ | (81)
Total purchase price | ​ | $ | 4,082 | ​ | $ | — | ​ | $ | 4,082
(a) | In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal to address divestitures required by the U.S. Department of Justice. Upon acquisition these assets met the criteria for reporting discontinued operations and were classified as held for sale and included within the “Assets held for sale” and “Liabilities held for sale” line items in the above final allocation of purchase price. Immediately following the acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million.
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(b) | At the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due November 2024, the fair value of which was $438 million. In November 2020, we redeemed the notes pursuant to an optional redemption feature.
​ The final allocation of $601 million for other intangibles includes $572 million for customer relationships with an amortization period of 15 years and $29 million of other intangibles with a weighted average amortization period of seven years. The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Advanced Disposal as though the companies had been combined as of January 1, 2019. Examples of adjustments made to arrive at the pro forma amounts include, but are not limited to, the following: •The effect of divestitures required by the U.S. Department of Justice; •Intercompany true-ups based on acquisition/divestiture activity; •Transaction expenses incurred by us and Advanced Disposal; •Adjustments to depreciation and amortization expense due to step-up in fair value of the acquired assets; and •Interest expense adjustments. The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2019 for the year ended December 31 (in millions, except per share amounts): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2020 |  | 2019
Operating revenues | ​ | $ | 16,192 | ​ | $ | 16,660
Net income attributable to Waste Management, Inc. | ​ |  | 1,685 | ​ |  | 1,472
Basic earnings per common share | ​ | ​ | 3.99 | ​ | ​ | 3.47
Diluted earnings per common share | ​ | ​ | 3.96 | ​ | ​ | 3.44
​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average common shares outstanding: | ​ | ​ | ​ | ​ | ​ | ​
Basic | ​ |  | 423 | ​ |  | 425
Diluted | ​ |  | 425 | ​ |  | 428
​ 2019 Acquisitions During the year ended December 31, 2019, we acquired 18 businesses, including Petro Waste Environmental LP (“Petro Waste”) discussed below, primarily related to our Solid Waste business. Total consideration, net of cash acquired, for all acquisitions was $515 million, which included $501 million in cash paid and other consideration of $14 million, primarily purchase price holdbacks. In 2019, we paid $6 million of contingent consideration, of which $4 million was related to acquisitions completed prior to 2019. In addition, we paid $20 million of holdbacks, of which $9 million related to 2019 acquisitions. Contingent consideration obligations are primarily based on achievement by the acquired businesses of certain negotiated goals, which generally include targeted financial metrics. Total consideration for our 2019 acquisitions was primarily allocated to $350 million of property and equipment, $53 million of other intangible assets and $111 million of goodwill. Other intangible assets included $38 million of customer relationships and $15 million of covenants not-to-compete. The goodwill was primarily a result of expected synergies from combining the acquired businesses with our existing operations and was tax deductible. Petro Waste — On March 8, 2019, Waste Management Energy Services Holdings, LLC, an indirect wholly-owned subsidiary of WMI, acquired Petro Waste. The acquired business provides comprehensive oilfield environmental services and solid waste disposal facilities in the Permian Basin and the Eagle Ford Shale. The acquisition expanded our offerings and enhanced the quality of solid waste disposal services for oil and gas exploration and production operations in Texas. Our purchase price was primarily allocated to seven landfills, which are included in our property and equipment. The acquisition was funded using commercial paper borrowings, and the acquisition accounting for this transaction was finalized in 2019. The operating results of the acquired business did not have a material impact to our consolidated financial statements for the periods presented herein. Given the significant change in energy market dynamics subsequent to the acquisition, we saw a decline in the fair value of certain of these assets and recognized an impairment during 2020, as discussed further in Note 11. Divestitures In 2021, 2020 and 2019, the aggregate sales price for divestitures of certain landfill assets, as well as hauling and ancillary operations, was $48 million, $856 million and $8 million, and we recognized net gains of $44 million, net gains of $33 million and net losses of less than $1 million, respectively. In 2021, divestitures primarily related to the sale of certain non-strategic Canadian operations, as discussed in Note 11. In 2020, divestitures primarily consisted of assets required to be sold by the U.S. Department of Justice in connection with our acquisition of Advanced Disposal, as discussed above. In 2019, divestitures were part of our continuous focus on improving or divesting certain non-strategic or underperforming operations. The remaining amounts reported in the Consolidated Statements of Cash Flows generally relate to the sale of fixed assets.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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