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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2022
ACQUISITIONS |
ACQUISITIONS |
2. | ACQUISITIONS
On February 17, 2022, the Company completed its acquisition of CANarchy Craft Brewery Collective LLC (“CANarchy”), a craft beer and hard seltzer company, for $330.4 million in cash, subject to adjustments (the “CANarchy Transaction”). The CANarchy Transaction facilitates the Company’s entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale’s Pale Ale® and Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin BrewingTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA and Juicy IPA, the Wasatch® family of brands including Apricot Hefeweizen, as well as certain other brands (collectively the “CANarchy Brands”) to the Company’s beverage portfolio. The transaction did not include CANarchy’s stand-alone restaurants. The Company’s organizational structure for its existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team. The Company accounted for the CANarchy Transaction in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”. The following table summarizes the fair value allocations of the CANarchy Transaction: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Identifiable | ​ | ​ | ​
​ | ​ | Assets Acquired | ​ | ​ | ​
​ | ​ | and Liabilities | ​ | Consideration
​ | ​ | Assumed | ​ | Transferred
Intangibles - trademarks (non-amortizing) | ​ | $ | 94,500 | ​ | $ | —
Intangibles - customer relationships (amortizing) | ​ | ​ | 54,500 | ​ |  | —
Intangibles - permits (non-amortizing) | ​ | ​ | 6,000 | ​ |  | —
Property and equipment, net | ​ | ​ | 81,285 | ​ |  | —
Inventory | ​ | ​ | 18,300 | ​ |  | —
Right-of -use assets | ​ | ​ | 12,836 | ​ |  | —
Operating lease liabilities | ​ | ​ | (12,836) | ​ |  | —
Working capital (excluding inventory) | ​ | ​ | (5,640) | ​ |  | —
Other | ​ | ​ | (770) | ​ |  | —
Goodwill | ​ | ​ | 81,298 | ​ |  | —
Cash | ​ |  | 3,248 | ​ |  | 332,721
Total | ​ | $ | 332,721 | ​ | $ | 332,721
​ The Company determined the fair values as follows:
| ● | Trademarks – relief-from-royalty method of the income approach
| ● | Customer relationships – distributor method of the income approach
| ● | Permits – with-and-without method of the income approach
| ● | Property and equipment – cost approach
| ● | Inventory – comparative sales method and replacement cost method
The book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts. The Company has determined goodwill in accordance with ASC 805, which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date. For tax purposes, the CANarchy Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the CANarchy assets, net, equal to the purchase price. In accordance with Regulation S-X, pro forma unaudited condensed financial information for the CANarchy Transaction has not been provided as the impact of the transaction on the Company’s financial position, results of operations and liquidity was not material. On May 5, 2022, the Company acquired certain real property and equipment in Norwalk, California for a purchase price of $62.5 million. The acquisition was treated as an asset acquisition for accounting purposes. The fair value allocations include $50.6 million for land, $10.0 million for building and $1.9 million for equipment. The Company intends to utilize the property as a manufacturing facility for certain of its products.

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