The following table summarizes the allocation of the preliminary purchase price:
| | |
Total purchase consideration (full payment on closing) | | 1,072,657 |
| | |
Book value of Shareholders’ Equity of MMC Brasil | | 587,226 |
| | |
Fair value adjustment | | |
Inventories (1) | | 7,120 |
Property, plant and equipment (2) | | 105,858 |
Trademark and patents (3) | | 189,655 |
Net identifiable assets acquired | | 889,859 |
Goodwill (4) | | 182,798 |
| (1) | Measured considering the balance of finished products based on selling price, net of selling expenses. |
| (2) | Measured based on the analysis of market data on comparable transactions and cost quantification, based on the estimate of replacement or replacement value of the assets. |
| (3) | Measured based on revenue projections for products under the evaluated brands, according to the Refief from Royalties methodology. |
(4)Goodwill is attributable to the workforce and expected future profitability of the acquired business. It will be deductible for tax purposes.
No deferred tax was recognized on the fair value adjustments as there is an expectation of merging MMC within the fiscal year of 2023.
Considering the fact that MMC Brasil was created based on a carve out of a portion of the KC Brasil businesses, counterparty of the transaction, there is no previous history of revenue and/or profits specifically for the acquired entity to be considered or included in a pro forma consolidated revenue and pro forma consolidated profit as if the acquisition had occurred on January 1, 2023.
Acquisition related costs of R$12,105 are included in administrative expenses in profit or loss.
1.2.4.Federal Supreme Court (“STF”) decision – Effectiveness of final and unappealable tax decisions
On February 8, 2023, the Federal Supreme Court in Brazil concluded the judgments of Items 881 and 885, which discussed the effects of res judicata. Notwithstanding, considering the information available as of the date of these unaudited condensed consolidated interim financial information, the Company is not a party to any litigation related to a tax not being collected due to a past decision considered unappealable, therefore, the Company has no material adjustment due to the decision.
1.2.5.Treasury shares cancelled
On February 28, 2023, the Board of Directors decided to cancel 37,145,969 common shares, with an average cost of R$40.84 (forty reais and eighty-four cents) per share, in the amount of R$1,517,224, that were being held in treasury, without changing the share capital and against the balances of available profit reserves. After the cancellation of shares, the share capital of R$9,269,281 is now divided into 1,324,117,615 common shares, all nominative, book-entry and without par value.
1.2.6.Biomas
On September 5, 2022, Biomas Serviços Ambientais, Restauração e Carbono Ltda. (“Biomas”) was initially established by Suzano S.A.
On November 12, 2022, Suzano in partnership with Itaú Unibanco S.A, Marfrig Global Foods S.A., Rabobank Foundational Investments B.B., Santander Corretora de Seguros, Investimentos e Serviços S.A. and Vale S.A., announced an alliance during an event held at the Climate Conference, COP27, in Egypt, for the creation of a company focused entirely to forest restoration, conservation and preservation activities in Brazil.
After the transformation of Biomas into a joint venture, Suzano, together with Marfrig, Rabobank and Vale, made a commitment to invest R$20,000 each partner, in accordance to the terms of the respective investment agreements on February 27, 2023, once the conditions precedent and closing acts established in said agreements were fulfilled. Itaú and Santander made their respective capital contributions on March 21, 2023.
