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Acquisitions and Divestitures | 12 Months Ended
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Sep. 27, 2019
Business Combinations [Abstract] |
Acquisitions and Divestitures | ACQUISITIONS AND DIVESTITURES: Divestiture On November 9, 2018, the Company completed the sale of its wholly-owned Healthcare Technologies ("HCT") business for $293.7 million in cash. The transaction resulted in a pretax gain of $156.3 million (tax effected gain of $139.2 million) in the Consolidated Statements of Income for the fiscal year ended September 27, 2019. The Company evaluated the business under the rules for discontinued operations and concluded it did not meet all of the criteria required. AmeriPride Services, Inc. ("AmeriPride") Acquisition On January 19, 2018, the Company completed the acquisition of AmeriPride, a uniform and linen rental and supply company in the U.S. and Canada, pursuant to the Agreement and Plan of Merger ("AmeriPride Merger Agreement") dated as of October 13, 2017, by and among the Company, AmeriPride, Timberwolf Acquisition Corporation, and Bruce M. Steiner, in his capacity as Stockholder Representative. Upon completion of the acquisition, AmeriPride became a wholly owned subsidiary of the Company and its results are included in the Company's Uniform segment. The total consideration paid for AmeriPride was $995.4 million, partially offset by $84.9 million of cash acquired. In order to finance the AmeriPride acquisition, the Company entered into a long-term financing agreement (see Note 5). During the fiscal year ended September 28, 2018, the Company incurred acquisition-related costs of $12.7 million, included in "Selling and general corporate expenses," and $5.2 million of commitment fees, included in "Interest and Other Financing Costs, net" in the Company’s Consolidated Statements of Income. Consideration The Company has accounted for the AmeriPride acquisition as a business combination under the acquisition method of accounting. The Company finalized its allocation of the purchase price for the transaction based upon the fair value of net assets acquired and liabilities assumed at the date of acquisition. For tax purposes, this acquisition is a taxable transaction. Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value The following tables summarize the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date (in thousands):
Current assets | $ | 237,807 |
Noncurrent assets | 963,078 |
Total assets | $ | 1,200,885 |
Current liabilities | $ | 137,867 |
Noncurrent liabilities | 67,590 |
Total liabilities | $ | 205,457 |
Intangible Assets The following table identifies the Company’s allocations of purchase price to the intangible assets acquired by category:
|  | Estimated Fair Value (in millions) |  | Weighted-Average Estimated Useful Life (in years)
Customer relationship assets |  | $ | 297.0 |  |  | 15
Trade names |  |  | 24.0 |  |  | 3 | to indefinite
Total intangible assets |  | $ | 321.0 |  |  |
The fair value of the customer relationship assets was determined using the “multi-period excess earnings method” which considers the present value of net cash flows expected to be generated by the customer relationships, excluding any cash flows related to contributory assets. The fair value of the two trade names acquired were determined using the “relief-from-royalty method” which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Goodwill The Company recorded $365.2 million of goodwill in connection with its purchase price allocation relating to the AmeriPride acquisition, all of which was recognized in the Uniform reporting segment. Factors that contributed to the Company’s recognition of goodwill include the Company’s intent to expand and complement its existing uniform business and to enhance its customer service experience, in addition to the anticipated synergies the Company expects to generate from the acquisition. Avendra, LLC ("Avendra") Acquisition On December 11, 2017, the Company completed the acquisition of Avendra, a hospitality procurement services provider in North America, which included the merger of Capital Merger Sub, LLC, a wholly owned subsidiary of the Company, with Avendra, pursuant to the Agreement and Plan of Merger ("Avendra Merger Agreement") dated as of October 13, 2017, by and among Aramark Services, Inc. (“ASI”), a wholly owned subsidiary of the Company, Avendra, Capital Merger Sub, LLC, and Marriott International, Inc., in its capacity as Holder Representative. Avendra continued as the surviving entity of the merger and is a wholly owned subsidiary of the Company whose financial results are included within the FSS United States reporting segment from December 11, 2017. The total consideration paid for Avendra was $1,386.4 million, partially offset by $87.3 million of cash and restricted investments acquired. In order to finance the Avendra acquisition, the Company entered into a long-term financing agreement (see Note 5). During the fiscal year ended September 28, 2018, the Company incurred acquisition-related costs of $11.5 million, included in "Selling and general corporate expenses," and $6.7 million of commitment fees, included in "Interest and Other Financing Costs, net" in the Company’s Consolidated Statements of Income. Consideration The Company has accounted for the Avendra acquisition as a business combination under the acquisition method of accounting. The Company finalized its allocation of the purchase price for the transaction based upon the fair value of net assets acquired and liabilities assumed at the date of acquisition. For tax purposes, this acquisition is a taxable transaction. Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value The following tables summarize the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date (in thousands):
Current assets | $ | 157,614 |
Noncurrent assets | 1,345,532 |
Total assets | $ | 1,503,146 |
Current liabilities | $ | 111,087 |
Noncurrent liabilities | 5,681 |
Total liabilities | $ | 116,768 |
Intangible Assets The following table identifies the Company’s allocations of purchase price to the intangible assets acquired by category:
|  | Estimated Fair Value (in millions) |  | Weighted-Average Estimated Useful Life (in years)
Customer relationship assets |  | $ | 567.0 |  |  | 15
Trade name |  |  | 222.0 |  |  | indefinite
Total intangible assets |  | $ | 789.0 |  |  |
The fair value of the customer relationship assets was determined using the “multi-period excess earnings method” which considers the present value of net cash flows expected to be generated by the customer relationships, excluding any cash flows related to contributory assets. The fair value of the trade name was determined using the “relief-from-royalty method” which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trademarks being owned. Goodwill The Company recorded $530.5 million of goodwill in connection with its purchase price allocation relating to the Avendra acquisition, all of which was recognized in the FSS United States reporting segment. Factors that contributed to the Company’s recognition of goodwill include the Company’s intent to expand its buying scale through Avendra’s procurement capabilities and to expand its customer base outside of its traditional industries, in addition to the anticipated synergies the Company expects to generate from the acquisition. Combined Revenue and Earnings for AmeriPride and Avendr a Included in the Company’s Consolidated Statements of Income for the fiscal year ended September 28, 2018 were combined revenue from AmeriPride and Avendra of approximately $522.2 million related to these entities. Combined net income for the results of AmeriPride and Avendra was approximately $8 million for the fiscal year ended September 28, 2018, which excludes the impact of the increased interest expense incurred from the financing of the acquisitions and acquisition related costs included in the Corporate segment. Unaudited Pro Forma Results of Operations Reflecting AmeriPride and Avendra The following table reflects the unaudited pro forma combined results of operations for the fiscal years ended September 28, 2018 and September 29, 2017 for the Company, assuming the closing of both acquisitions occurred on October 1, 2016:
| Fiscal Year Ended
Unaudited (in thousands) |  | September 28, 2018 |  | September 29, 2017
Total revenue |  | $ | 16,014,463 |  |  | $ | 15,378,832 |
Net income |  |  | 624,334 |  |  |  | 328,932 |
The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the closing of the acquisitions taken place on October 1, 2016. Furthermore, the pro forma results do not purport to project the future results of operations of the Company. The unaudited pro forma information primarily reflects the following adjustments:
• | adjustments to amortization expense related to identifiable intangible assets acquired;
• | adjustments to depreciation expense related to the fair value of property and equipment acquired;
• | adjustments to interest expense to reflect the long-term financing agreements used to finance the acquisitions (see Note 5); and
• | adjustments for the tax effect of the aforementioned adjustments.
Merger and Integration Costs As a result of the Avendra and AmeriPride acquisitions, the Company incurred merger and integration costs of approximately $36.1 million and $78.1 million during fiscal 2019 and fiscal 2018, respectively. The expenses mainly related to severance costs, facility consolidations, professional services, rebranding expenses and other expenses. Other Acquisitions During fiscal 2019, the Company paid net cash consideration of approximately $44.9 million for various acquisitions. During fiscal 2018, the Company paid cash consideration of approximately $30.6 million for various acquisitions, excluding the purchases of AmeriPride and Avendra. During fiscal 2017, the Company paid cash consideration of approximately $142.1 million for various acquisitions. The revenue, net income, assets and liabilities of the acquisitions did not have a material impact on the Company's consolidated financial statements.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: 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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