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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2017
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS ACTIVE Network We acquired the communities and sports divisions of Athlaction Topco, LLC ("ACTIVE Network") on September 1, 2017, for total purchase consideration of $1.2 billion. ACTIVE Network delivers cloud-based enterprise software, including payment technology solutions, to event organizers in the communities and health and fitness markets. This acquisition aligns with our technology-enabled, software driven strategy and adds an enterprise software business operating in two additional vertical markets that we believe offer attractive growth fundamentals. The following table summarizes the cash and non-cash components of the consideration transferred on September 1, 2017 (in thousands):
Cash consideration paid to ACTIVE Network stockholders |  | $ | 599,497 |
Fair value of Global Payments common stock issued to ACTIVE Network stockholders |  | 572,079 |
Total purchase consideration |  | $ | 1,171,576 |
We funded the cash portion of the total purchase consideration primarily by drawing on our Revolving Credit Facility (described in "Note 7—Long-term Debt and Lines of Credit"). The acquisition-date fair value of 6,357,509 shares of our common stock issued to the sellers was determined based on the share price of our common stock as of the acquisition date and the effect of certain transfer restrictions. This transaction was accounted for as a business combination, which requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. The accounting for this acquisition was not complete as of December 31, 2017. The fair values of the assets acquired and the liabilities assumed have been determined provisionally and are subject to adjustment as we obtain additional information. In particular, additional time is needed to refine and review the results of the valuation of assets and liabilities and to evaluate the basis differences for assets and liabilities for financial reporting and tax purposes. The provisional estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed provisionally determined as of September 30, 2017 and as subsequently revised for measurement-period adjustments, including a reconciliation to the total purchase consideration, are as follows:
| Provisional at September 30, 2017 |  | Measurement- Period Adjustments |  | Provisional at December 31, 2017
| (in thousands)
Cash and cash equivalents | $ | 42,866 |  |  | $ | 47 |  |  | $ | 42,913 |
Property and equipment | 22,889 |  |  | (904 | ) |  | 21,985 |
Identified intangible assets | 471,120 |  |  | (60,575 | ) |  | 410,545 |
Other assets | 80,485 |  |  | 6,755 |  |  | 87,240 |
Deferred income taxes | (26,757 | ) |  | (4,886 | ) |  | (31,643 | )
Other liabilities | (123,047 | ) |  | (21,085 | ) |  | (144,132 | )
Total identifiable net assets | 467,556 |  |  | (80,648 | ) |  | 386,908 |
Goodwill | 704,020 |  |  | 80,648 |  |  | 784,668 |
Total purchase consideration | $ | 1,171,576 |  |  | $ | — |  |  | $ | 1,171,576 |
The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding the valuation of identified intangible assets, certain tax positions and deferred income taxes. As of December 31, 2017, we still consider these balances to be provisional because we are still in the process of gathering and reviewing information to support the valuation of identified intangible assets, certain tax positions and deferred income taxes. Goodwill of $784.7 million arising from the acquisition, included in the North America operating segment, was attributable to expected growth opportunities, potential synergies from combining our existing businesses and an assembled workforce. We expect that approximately 80% of the goodwill will be deductible for income tax purposes. The following reflects the provisional estimated fair values of the identified intangible assets and the respective weighted-average estimated amortization periods:
| Provisional Estimated Fair Values |  | Weighted-Average Estimated Amortization Periods
| (in thousands) |  | (years)
Customer-related intangible assets | $ | 189,000 |  |  | 17
Acquired technology | 153,300 |  |  | 9
Trademarks and trade names | 59,400 |  |  | 15
Covenants-not-to-compete | 8,845 |  |  | 3
Total estimated acquired intangible assets | $ | 410,545 |  |  | 13
The estimated fair value of customer-related intangible assets was determined using the income approach, which is based on projected cash flows discounted to their present value using discount rates that consider the timing and risk of the forecasted cash flows. The discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Acquired technology was valued using the replacement cost method, which required us to estimate the cost to construct an asset of equivalent utility at prices available at the time of the valuation analysis, with adjustments in value for physical deterioration and functional and economic obsolescence. Trademarks and trade names were valued using the relief-from-royalty approach. This method assumes that trademarks and trade names have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. This method required us to estimate the future revenue for the related brands, the appropriate royalty rate and the weighted-average cost of capital. The discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Heartland We merged with Heartland on April 22, 2016 for total purchase consideration of $3.9 billion. The merger significantly expanded our small and medium-sized enterprise distribution, customer base and vertical reach in the United States. The following table summarizes the cash and non-cash components of the consideration transferred on April 22, 2016 (in thousands):
Cash consideration paid to Heartland stockholders |  | $ | 2,043,362 |
Fair value of Global Payments common stock issued to Heartland stockholders |  | 1,879,458 |
Total purchase consideration |  | $ | 3,922,820 |
The merger date fair value of common stock issued to Heartland stockholders and equity award holders was determined based on 38.4 million shares of Heartland common stock, including common stock outstanding and equity awards for which vesting accelerated in accordance with the Merger Agreement, multiplied by the exchange ratio of 0.6687 and the closing share price of Global Payments common stock as of April 22, 2016 of $73.29 per share. This transaction was accounted for as a business combination, which requires that we record the assets acquired and liabilities assumed at fair value as of the acquisition date. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed provisionally determined as of December 31, 2016 and as subsequently revised for measurement-period adjustments, including a reconciliation to the total purchase consideration, are as follows:
| Provisional at December 31, 2016 |  | Measurement- Period Adjustments |  | Final
| (in thousands)
Cash and cash equivalents | $ | 304,747 |  |  | $ | — |  |  | $ | 304,747 |
Accounts receivable | 70,385 |  |  | — |  |  | 70,385 |
Prepaid expenses and other assets | 103,090 |  |  | (5,131 | ) |  | 97,959 |
Identified intangible assets | 1,639,040 |  |  | — |  |  | 1,639,040 |
Property and equipment | 106,583 |  |  | — |  |  | 106,583 |
Debt | (437,933 | ) |  | — |  |  | (437,933 | )
Accounts payable and accrued liabilities | (457,763 | ) |  | (65 | ) |  | (457,828 | )
Settlement processing obligations | (36,578 | ) |  | (3,727 | ) |  | (40,305 | )
Deferred income taxes | (518,794 | ) |  | 18,907 |  |  | (499,887 | )
Other liabilities | (64,938 | ) |  | (33,495 | ) |  | (98,433 | )
Total identifiable net assets | 707,839 |  |  | (23,511 | ) |  | 684,328 |
Goodwill | 3,214,981 |  |  | 23,511 |  |  | 3,238,492 |
Total purchase consideration | $ | 3,922,820 |  |  | $ | — |  |  | $ | 3,922,820 |
The measurement-period adjustments were the result of continued refinement of certain estimates, particularly regarding certain tax positions and deferred income taxes. Goodwill of $3.2 billion arising from the merger, included in the North America segment, was attributable to expected growth opportunities, potential synergies from combining our existing businesses and an assembled workforce, and is not deductible for income tax purposes. During the year ended December 31, 2016, we incurred transaction costs in connection with the merger of $24.7 million, which were recorded in selling, general and administrative expenses in the consolidated statements of income. The following reflects the estimated fair values of the identified intangible assets and the respective weighted-average estimated amortization periods:
| Estimated Fair Values |  | Weighted-Average Estimated Amortization Periods
| (in thousands) |  | (years)
Customer-related intangible assets | $ | 977,400 |  |  | 15
Acquired technology | 457,000 |  |  | 5
Trademarks and trade names | 176,000 |  |  | 7
Covenants-not-to-compete | 28,640 |  |  | 1
Total estimated acquired intangible assets | $ | 1,639,040 |  |  | 11
FIS Gaming Business On June 1, 2015, we acquired certain assets of Certegy Check Services, Inc., a wholly-owned subsidiary of Fidelity National Information Services, Inc. ("FIS"). Under the purchase arrangement, we acquired substantially all of the assets of its gaming business related to licensed gaming operators (the "FIS Gaming Business"), including relationships with gaming clients in approximately 260 locations as of the acquisition date, for $237.5 million, funded from borrowings on our revolving credit facility and cash on hand. We acquired the FIS Gaming Business to expand our direct distribution and service offerings in the gaming market. This transaction was accounted for as a business combination. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, are as follows (in thousands):
Customer-related intangible assets |  | $ | 143,400 |
Liabilities |  | (150 | )
Total identifiable net assets |  | 143,250 |
Goodwill |  | 94,250 |
Total purchase consideration |  | $ | 237,500 |
Goodwill arising from the acquisition, included in the North America segment, was attributable to expected growth opportunities, including cross-selling opportunities at existing and acquired gaming client locations, operating synergies in the gaming business and assembled workforce. Goodwill associated with this acquisition is deductible for income tax purposes. The customer-related intangible assets have an estimated amortization period of 15 years. Realex Payments On March 25, 2015, we acquired approximately 95% of the outstanding shares of Pay and Shop Limited, which does business as Realex Payments ("Realex"), for €110.2 million in cash ($118.9 million equivalent as of the acquisition date). Realex is a leading European online payment gateway technology provider. This acquisition furthered our strategy to provide omnichannel solutions that combine gateway services, payment service provisioning and payment technology services across Europe. This transaction was accounted for as a business combination. We recorded the assets acquired, liabilities assumed and noncontrolling interest at their estimated fair values as of the acquisition date. On October 5, 2015, we paid €6.7 million ($7.5 million equivalent as of October 5, 2015) to acquire the remaining shares of Realex, after which we own 100% of the outstanding shares. The estimated acquisition date fair values of the assets acquired, liabilities assumed and the noncontrolling interest, including a reconciliation to the total purchase consideration, are as follows (in thousands):
Cash |  | $ | 4,082 |
Customer-related intangible assets |  | 16,079 |
Acquired technology |  | 39,820 |
Trade name |  | 3,453 |
Other intangible assets |  | 399 |
Other assets |  | 6,213 |
Liabilities |  | (3,479 | )
Deferred income tax liabilities |  | (7,216 | )
Total identifiable net assets |  | 59,351 |
Goodwill |  | 66,809 |
Noncontrolling interest |  | (7,280 | )
Total purchase consideration |  | $ | 118,880 |
Goodwill of $66.8 million arising from the acquisition, included in the Europe segment, was attributable to expected growth opportunities in Europe, potential synergies from combining our existing business with gateway services and payment service provisioning in certain markets and an assembled workforce to support the newly acquired technology. Goodwill associated with this acquisition is not deductible for income tax purposes. The customer-related intangible assets have an estimated amortization period of 16 years. The acquired technology has an estimated amortization of 10 years. The trade name has an estimated amortization period of 7 years. Ezidebit On October 10, 2014, we completed the acquisition of 100% of the outstanding stock of Ezi Holdings Pty Ltd ("Ezidebit") for AUD302.6 million in cash ($266.0 million equivalent as of the acquisition date). This acquisition was funded by a combination of cash on hand and borrowings on our revolving credit facility. Ezidebit is a leading integrated payments company focused on recurring payments verticals in Australia and New Zealand. The acquisition of Ezidebit further enhanced our existing integrated solutions offerings. This transaction was accounted for as a business combination. We recorded the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The estimated acquisition-date fair values of major classes of assets acquired and liabilities assumed, including a reconciliation to the total purchase consideration, are as follows (in thousands):
Cash | $ | 45,826 |
Customer-related intangible assets | 42,721 |
Acquired technology | 27,954 |
Trade name | 2,901 |
Other assets | 2,337 |
Deferred income tax assets (liabilities) | (9,788 | )
Other liabilities | (49,797 | )
Total identifiable net assets | 62,154 |
Goodwill | 203,828 |
Total purchase consideration | $ | 265,982 |
Goodwill of $203.8 million arising from the acquisition, included in the Asia-Pacific segment, was attributable to expected growth opportunities in Australia and New Zealand, as well as growth opportunities and operating synergies in integrated payments in our existing Asia-Pacific and North America markets. Goodwill associated with this acquisition is not deductible for income tax purposes. The customer-related intangible assets have an estimated amortization period of 15 years. The acquired technology has an estimated amortization period of 15 years. The trade name has an estimated amortization period of 5 years.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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