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Acquisitions | 9 Months Ended
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Sep. 30, 2020
Business Combinations [Abstract] |
Acquisitions | Acquisitions Worldpay Acquisition On July 31, 2019, FIS completed the acquisition of Worldpay by acquiring 100 percent of Worldpay's equity. The Worldpay acquisition brought an integrated technology platform with a comprehensive suite of products and services serving merchants and financial institutions and provided FIS with enhanced global payment capabilities, robust risk and fraud solutions and advanced data analytics. The total purchase price was as follows (in millions):
Cash consideration | $ | 3,423 |
Value of FIS share consideration | 38,635 |
Pay-off of Worldpay long-term debt not contractually assumed | 5,738 |
Value of outstanding converted equity awards attributed to services already rendered | 449 |
Total purchase price | $ | 48,245 |
The acquisition was accounted for as a business combination under FASB ASC Topic 805, Business Combinations ("Topic 805"). We recorded an allocation of the purchase price to Worldpay tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of July 31, 2019. The amounts for intangible assets were based on third-party valuations performed. Goodwill was recorded as the residual amount by which the purchase price exceeded the fair value of the net assets acquired. Goodwill consists primarily of expected synergies of combining operations, the acquired workforce, and growth opportunities, none of which qualify as separately identifiable intangible assets. The Company completed its assessment of the fair value of assets acquired and liabilities assumed within the one-year period from the date of acquisition. The Company recorded measurement period adjustments due to additional information received primarily related to contingencies and income taxes, resulting in a decrease in the value assigned to goodwill. There was no material impact on earnings as a result of the measurement period adjustments recorded. The final purchase price allocation is as follows (in millions):
Cash acquired | $ | 305 |
Settlement deposits and merchant float (1) | 2,444 |
Trade receivables | 1,594 |
Goodwill | 38,057 |
Intangible assets | 13,682 |
Computer software | 1,297 |
Other noncurrent assets (2) | 1,641 |
Accounts payable, accrued and other liabilities | (1,021) |
Settlement payables | (3,167) |
Deferred income taxes | (2,860) |
Long-term debt, subsequently repaid | (1,805) |
Other liabilities and noncontrolling interest (3) | (1,922) |
Total purchase price | $ | 48,245 |
(1)Includes $1,693 million of merchant float. (2)Includes $534 million of other restricted cash. (3)Includes $542 million of noncurrent tax receivable agreement liability (see Note 9) and $875 million contingent value rights liability (see Note 5). The gross contractual amount of trade receivables acquired was approximately $1,646 million. The difference between that total and the amount reflected above represents our best estimate at the acquisition date of the contractual cash flows not expected to be collected. This difference was derived using Worldpay's historical bad debts, sales allowances and collection trends. Intangible assets primarily consist of software, customer relationship assets and trademarks with weighted average estimated useful lives of seven years, ten years and five years, respectively, and fair value amounts assigned of $1,297 million, $13,272 million and $410 million, respectively. See Note 9 for acquired contingencies resulting from the Worldpay acquisition. Unaudited Supplemental Pro Forma Results Giving Effect to the Worldpay Acquisition Worldpay's revenues and pre-tax loss of $734 million and $162 million, respectively, which include the impact of purchase accounting adjustments, are included in the consolidated statements of earnings for the period from July 31, 2019, through September 30, 2019. Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three and nine months ended September 30, 2019, assuming the acquisition had occurred as of January 1, 2018, are presented below (in millions, except per share amounts):
|  | September 30, 2019
|  | Three months ended |  | Nine months ended
Revenue |  | $ | 3,154 |  |  | $ | 9,380 |
Net earnings (loss) attributable to FIS common stockholders |  | $ | 215 |  |  | $ | 348 |
Net earnings (loss) per share-basic attributable to FIS common stockholders |  | $ | 0.35 |  |  | $ | 0.57 |
Net earnings (loss) per share-diluted attributable to FIS common stockholders |  | $ | 0.35 |  |  | $ | 0.56 |
The unaudited pro forma results include certain pro forma adjustments to revenue and net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2018, including the following: •additional amortization expense that would have been recognized relating to the acquired intangible assets; •adjustment to interest expense to reflect the removal of Worldpay debt and the addition of borrowings of FIS in conjunction with the acquisition; and •a reduction in expenses for the three and nine months ended September 30, 2019, of $149 million and $210 million, respectively, for acquisition-related transaction costs and other one-time non-recurring costs. Virtus Acquisition On January 2, 2020, FIS acquired a majority interest in Virtus Partners ("Virtus"), previously a privately held company that provides high-value managed services and technology to the credit and loan market. FIS acquired a 70% voting and financial interest in Virtus with 30% interest retained by the founders of Virtus ("Founders"). The acquisition was accounted for as a business combination under Topic 805. We recorded a provisional allocation of the $404 million cash purchase price and the $173 million fair value of redeemable noncontrolling interest to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, consisting primarily of $254 million in customer relationships and $51 million in software assets. We also recorded $245 million in goodwill for the residual amount by which the purchase price exceeded the provisional fair value of the net assets acquired. Our purchase price allocation is provisional as of September 30, 2020, and we expect to finalize as soon as practicable, but no later than one year from the acquisition date. We recorded the 30% interest retained by the Founders at the acquisition date as redeemable noncontrolling interest, which is reflected outside of stockholders' equity on the consolidated balance sheet, given the agreement between FIS and the Founders that provides FIS with a call option and the Founders with a put option requiring FIS to purchase all of the Founders' retained interest in Virtus at a redemption value determined pursuant to the agreement. The call option and put option are exercisable at any time after two years and three years, respectively, following the acquisition date. Changes in the estimated redemption value are accreted through equity from the acquisition date to the date the call option becomes exercisable, to the extent the estimated redemption value is greater than the initial redeemable noncontrolling interest value recorded, as adjusted for the Founders' share of the cumulative impact of net earnings (loss).

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: 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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