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Business Combinations | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combinations | 3. Business Combinations (a)IAA Acquisition On March 20, 2023, the Company completed its acquisition of IAA, Inc. ("IAA") for a total purchase price of approximately $6.6 billion. The Company acquired IAA to create a leading omnichannel marketplace for vehicle buyers and sellers. IAA stockholders received $12.80 per share in cash and 0.5252 shares of the Company for each share of IAA common stock they owned (the “Exchange Ratio”). As such, the Company paid $1.7 billion in cash consideration and issued 70.3 million shares of its common stock. In addition, the Company repaid $1.2 billion of IAA’s net debt, which included all outstanding borrowings and unpaid fees under IAA’s credit agreement and $500.0 million principal amount of IAA senior notes, at a redemption price equal to 102.75% of the principal amount plus accrued and unpaid interest. IAA’s outstanding equity awards were also cancelled and exchanged into equivalent outstanding equity awards relating to the Company’s common stock, based on the equity award exchange ratio of 0.763139. The acquisition was accounted for in accordance with ASC 805, Business Combinations. The following table summarizes the final allocation of the purchase price to the fair value of assets acquired and liabilities assumed:
Purchase price (cash: $1,714.2 million; fair value of common shares issued: $3,712.9 million; repayment of net debt: $1,157.1 million; reimbursement of costs: $48.8 million; and fair value of exchanged equity awards: $13.1 million) | $ | 6,646.1 |
Assets acquired |
Cash and cash equivalents | 166.6 |
Trade and other receivables | 497.3 |
Inventory | 57.1 |
Other current assets | 28.0 |
Income taxes receivable | 0.6 |
Property, plant and equipment | 618.5 |
Operating lease right-of-use assets | 1,289.7 |
Other non-current assets | 34.8 |
Intangible assets | 2,712.1 |
Liabilities assumed |
Auction proceeds payable | 60.7 |
Trade and other liabilities | 257.0 |
Current operating lease liability | 77.5 |
Income taxes payable | 3.5 |
Long-term operating lease liability | 1,192.7 |
Other non-current liabilities | 24.3 |
Deferred tax liabilities | 689.5 |
Fair value of identifiable net assets acquired | 3,099.5 |
Goodwill acquired on acquisition | $ | 3,546.6 |
The following table summarizes the final fair values of the identifiable intangible assets acquired:
Asset |  | Fair value at acquisition |  | Weighted average amortization period
Customer relationships |  | $ | 2,293.5 |  |  | 15 years
Developed technology |  | 245.2 |  |  | 4 years
Trade names and trademarks |  | 166.6 |  |  | 5 years
Software under development |  | 6.8 |  |  | — |
Total |  | $ | 2,712.1 |  |  | 13.4 years
Goodwill relates to synergies expected to be achieved from the operations of the combined company, the assembled workforce of IAA, and intangible assets that do not qualify for separate recognition. Expected synergies include both increased revenue opportunities and the cost savings from the planned integration of platform infrastructure, facilities, personnel, and systems. The transaction is considered a non-taxable business combination and the goodwill is not deductible for tax purposes. (b)VeriTread Acquisition On January 3, 2023, the Company acquired 8,889,766 units of VeriTread, for $25.1 million cash consideration from its existing unitholders and acquired another 1,056,338 units through an investment of $3.0 million cash. As a result, the Company increased its investment in VeriTread to 75% and obtained control of VeriTread pursuant to an amended operating agreement on January 18, 2023. Immediately prior to the acquisition, the Company owned 11% of VeriTread, with an acquisition date fair value of $4.3 million based on the per unit purchase price, and therefore, upon remeasurement of its previously held interest, the Company recorded a gain of $1.4 million in other income, net at acquisition. VeriTread is a transportation technology company that provides an online marketplace solution for open deck transport, connecting shippers and service providers. Concurrently, the Company entered into a put/call agreement with one of the minority unitholders of VeriTread for its remaining units, another 21% ownership interest. Pursuant to this agreement, the minority unitholder has rights, in certain circumstances, to put or sell its remaining units of VeriTread to the Company, subject to VeriTread achieving certain performance targets at a predetermined value or fair value, depending on the timing and targets achieved. The Company also has the right to call or purchase the remaining units of the minority unitholder upon achievement of certain integration milestones at fair value. The redeemable non-controlling interest is classified in temporary equity on the interim condensed consolidated balance sheet. On the acquisition date the Company determined that redemption of the redeemable non-controlling interest was probable. An additional non-controlling interest of 4% held in VeriTread is classified within equity as that interest does not contain put/call options. The acquisition was accounted for in accordance with ASC 805, Business Combinations. The following table summarizes the final allocation of the purchase price to the fair value of assets acquired and liabilities assumed:
Purchase price (cash: $28.1 million; and fair value of previously held equity interest: $4.3 million) | $ | 32.4 |
Fair value of identifiable net assets acquired | 17.9 |
Redeemable non-controlling interest | (8.9) |
Non-controlling interest | (1.8) |
Goodwill acquired on acquisition | $ | 25.2 |
The final fair value of identifiable net assets acquired consists of cash and cash equivalents of $3.4 million, trade and other receivables and other current assets of $0.9 million, trade and other liabilities of $1.1 million, and identifiable intangible assets of $14.7 million as summarized in the following table:
Asset |  | Fair value at acquisition |  | Weighted average amortization period
Customer relationships |  | $ | 7.2 |  |  | 5 years
Software and technology assets |  | 7.1 |  |  | 7 years
Trade names and trademarks |  | 0.4 |  |  | 2 years
Total |  | $ | 14.7 |  |  | 5.9 years
Goodwill relates to benefits expected from the acquisition of VeriTread’s business, its assembled workforce and associated technical expertise, as well as anticipated synergies from applying VeriTread’s transportation platform, network of transport carriers, equipment database and services to the Company’s customer base. This acquisition is expected to accelerate the Company’s marketplace strategy, which brings services, insights, and transaction solutions together to improve the overall customer experience. The transaction is considered a non-taxable business combination and the goodwill is not deductible for tax purposes.

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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/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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