Acquisitions

12 Months Ended

Jun. 30, 2019

ACQUISITIONS

Assets acquired and liabilities assumed in business combinations are recorded on the Company’s Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date. The results of operations of the businesses acquired by the Company are included in the Company’s Consolidated Statements of Earnings beginning on the respective dates of acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill.

The Company is providing pro forma supplemental information for the acquisition of net assets of the North America Customer Communications (“NACC”) business of DST Systems, Inc., as the Company deemed this acquisition to be material to the Company’s operating results. Pro forma supplemental financial information for all acquisitions, excluding NACC, is not provided as the impact of these acquisitions on the Company’s operating results was not material for any acquisition individually or in the aggregate.

Fiscal Year 2019 Acquisitions:

BUSINESS COMBINATIONS

Financial information on each transaction is as follows:



	Rockall			RPM		TD Ameritrade		Total
	(in millions)
Cash payments, net of cash acquired	$	34.9		$	258.3	$	61.5	$	354.7
Deferred payments, net	(0.1		)	43.8		—		43.7
Contingent consideration liability	7.1			0.8		—		7.9
Aggregate purchase price	$	41.9		$	302.9	$	61.5	$	406.4

Net tangible assets acquired / (liabilities assumed)	$	(1.2	)	$	9.7	$	—	$	8.4
Goodwill	28.9			191.5		27.3		247.7
Intangible assets	14.2			101.7		34.2		150.2
Aggregate purchase price	$	41.9		$	302.9	$	61.5	$	406.4

Rockall

In May 2019, the Company completed the acquisition of Rockall, a market leading provider of securities-based lending (“SBL”) and collateral management solutions for wealth management firms and commercial banks. The acquisition expands Broadridge's core front-to-back office wealth capabilities, providing innovative SBL and collateral management technology solutions to help firms manage risk and optimize clients' securities lending and financing needs.


•	The contingent consideration liability is payable over the next two years upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $10.1 million upon the achievement in full of the defined financial targets by the acquired business.


•	Goodwill is not tax deductible.


•	Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a four-year life and six-year life, respectively.

The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, and is still subject to a working capital adjustment.

RPM

In June 2019, Broadridge acquired RPM, a leading Canadian provider of enterprise wealth management software solutions and services. The acquisition brings important new capabilities and next-generation technology to clients of both RPM and Broadridge.


•	The contingent consideration liability is payable over the next two years upon the achievement by the acquired business of certain revenue targets, and has a maximum potential pay-out of $3.7 million upon the achievement in full of the defined financial targets by the acquired business.


•	Goodwill is partially tax deductible.


•	Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and seven-year life, respectively.

TD Ameritrade

In June 2019, Broadridge acquired the retirement plan custody and trust assets from TD Ameritrade Trust Company, a subsidiary of TD Ameritrade Holding Company. The acquisition expands Broadridge's suite of solutions for the growing qualified and non-qualified retirement plan services market and the support it provides for third-party administrators, financial advisors, record-keepers, banks, and brokers.

•Goodwill is tax deductible.

•Intangible assets acquired consist of customer relationships, which are being amortized over a seven-year life.

Fiscal Year 2018 Acquisitions:

BUSINESS COMBINATIONS

Financial information on each transaction is as follows:



	Summit		ActivePath			FundAssist			Total
	(in millions)
Cash payments, net of cash acquired	$	26.4	$	21.8		$	41.3		$	89.5
Deferred payments, net	1.4		2.4			—			3.8
Contingent consideration liability (acquisition date fair value)	2.7		—			6.4			9.2
Aggregate purchase price	$	30.6	$	24.2		$	47.7		$	102.5

Net tangible assets acquired / (liabilities assumed)	$	0.2	$	(10.0	)	$	(1.9	)	$	(11.7	)
Goodwill	18.5		28.7			29.2			76.3
Intangible assets	12.0		5.6			20.4			38.0
Aggregate purchase price	$	30.6	$	24.2		$	47.7		$	102.5

Summit

In October 2017, the Company acquired Summit, a full service financial document management solutions provider, including document composition and regulatory filing services.


•	The contingent consideration liability is payable over the next three years upon the achievement by the acquired business of certain revenue and earnings targets, and has a maximum potential pay-out of $11.0 million upon the achievement in full of the defined financial targets by the acquired business.


•	The fair value of the contingent consideration liability at June 30, 2019 is $7.4 million.


•	Goodwill is primarily tax deductible.


•	Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and seven-year life, respectively.

ActivePath

In March 2018, the Company acquired ActivePath, a digital technology company with technology that enhances the consumer experience associated with consumer statements, bills and regulatory communications.


•	Goodwill is not tax deductible.


•	Intangible assets acquired consist primarily of software technology and customer relationships, which are being amortized over a five-year life and two-year life, respectively.

FundAssist

In May 2018, the Company acquired FundAssist, a regulatory, marketing and sales solutions service provider to the global investments industry.


•	The contingent consideration liability contains a revenue component which will be settled in fiscal year 2021, based on the achievement of a defined revenue target by the acquired business.


•	The fair value of the contingent consideration liability at June 30, 2019 is $7.0 million.


•	Goodwill is not tax deductible.


•	Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a six-year life and five-year life, respectively.

ASSET ACQUISITION

Purchase of Intellectual Property

In February 2018, the Company paid $40.0 million to an affiliate of Inveshare, Inc. (“Inveshare”) for the delivery of blockchain technology applications, as contemplated as part of the Company’s acquisition of intellectual property assets from Inveshare.

Fiscal Year 2017 Acquisitions:

BUSINESS COMBINATIONS

Financial information on each transaction is as follows:



	NACC		M&O			MAL			Total
	(in millions)
Cash payments, net of cash acquired	$	406.2	$	22.4		$	20.1		$	448.7
Note payable to sellers	—		2.5			3.2			5.7
Contingent consideration liability (acquisition date fair value)	—		—			1.4			1.4
Other closing adjustments	3.8		—			—			3.8
Aggregate purchase price	$	410.0	$	24.9		$	24.8		$	459.6

Net tangible assets acquired / (liabilities assumed)	$	52.2	$	(3.5	)	$	(2.9	)	$	45.8
Goodwill	135.7		17.2			22.6			175.5
Intangible assets	218.3		11.2			14.7			244.1
Other closing adjustments	3.8		—			—			3.8
Fair value of the Company’s pre-existing investment in MAL	—		—			(9.6		)	(9.6		)
Aggregate purchase price, net of other closing adjustments	$	410.0	$	24.9		$	24.8		$	459.6

NACC

In July 2016, the Company’s Investor Communication Solutions segment acquired the net assets of the NACC business of DST Systems, Inc., a leading provider of customer communication services including print and digital communication solutions, content management, postal optimization, and fulfillment.


•	The aggregate purchase price was $410.0 million in cash, or $406.2 million net of cash acquired and other closing adjustments.


•	Goodwill is primarily tax deductible.


•	Intangible assets acquired consist primarily of customer relationships and software technology, which are being amortized over a ten-year life and seven-year life, respectively.

The following summarizes the allocation of purchase price for the NACC acquisition (in millions):



	NACC

Accounts receivable, net	$	89.1
Other current assets	19.5
Property, plant and equipment	45.0
Intangible assets	218.3
Goodwill	135.7
Other non-current assets	1.6
Accounts payable	(14.3		)
Accrued expenses and other current liabilities	(62.9		)
Deferred taxes	(21.9		)
Deferred revenue	(1.1		)
Other long term liabilities	(2.9		)
Consideration paid, net of cash acquired	$	406.2

Unaudited Pro Forma Financial Information

The unaudited pro forma condensed consolidated results of operations in the table below are provided for illustrative purposes only and summarize the combined results of operations of Broadridge and NACC. For purposes of this pro forma presentation, the acquisition of NACC is assumed to have occurred on July 1, 2015. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets, interest expense from a recent bond offering, the proceeds of which were used to fund the acquisition, and certain integration related expenses.

This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on July 1, 2015, nor of the results of operations that may be obtained in the future.



	Years ended June 30,
	2017		2016
(in millions, except per share amounts)
Revenues	$	4,142.6	$	4,059.3
Net earnings	$	335.6	$	312.4

Basic earnings per share	$	2.84	$	2.64
Diluted earnings per share	$	2.78	$	2.57

M&O

In November 2016, the Company’s Global Technology and Operations segment acquired M&O Systems, Inc. (“M&O”). M&O is a provider of SaaS-based compensation management and related solutions for broker-dealers and registered investment advisors, and is now known as Broadridge Advisor Compensation Solutions.


•	Goodwill is not tax deductible.


•	Intangible assets acquired consist primarily of customer relationships and acquired software technology, which are being amortized over a seven-year life and six-year life, respectively.

MAL

In March 2017, the Company’s Global Technology and Operations segment acquired Message Automation Limited (“MAL”), which is a specialist provider of post-trade control solutions for sell-side and buy-side firms. The Company previously owned 25% of MAL through its acquisition of City Networks Ltd in fiscal year 2010, and purchased the remaining 75% of the company.


•	The contingent consideration liability is payable over the next four years upon the achievement by the acquired business of certain revenue and earnings targets.


•	The contingent consideration liability has a maximum potential pay-out of $2.8 million upon the achievement in full of the defined financial targets by the acquired business.


•	The fair value of the Company’s 25% pre-existing investment in MAL was determined to be $9.6 million, implied by the aggregate purchase price of the remaining 75% purchased, which resulted in a non-cash, nontaxable gain on investment of $9.3 million (“MAL investment gain”), included as part of Other non-operating income (expenses), net.


•	Goodwill is not tax deductible.


•	Intangible assets acquired consist primarily of customer relationships and acquired software technology, which are being amortized over a seven-year life and five-year life, respectively.

The fair value of the remaining contingent consideration liability at June 30, 2019 is $1.8 million.

ASSET ACQUISITION

Purchase of Intellectual Property

In September 2016, the Company’s Investor Communication Solutions segment acquired intellectual property assets from Inveshare and concurrently entered into a development agreement with an affiliate of Inveshare to use these assets to develop blockchain technology applications for Broadridge’s proxy business. The purchase price was $95.0 million, which consisted of a $90.0 million cash payment upon closing of the acquisition and a $5.0 million obligation payable which the Company paid in September 2017.