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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2018
ACQUISITIONS |
ACQUISITIONS | NOTE 20 ACQUISITIONS On August 27, 2018, we completed our acquisition (the “CSP Technologies Acquisition”) of all of the outstanding capital stock of CSP Technologies S.à r.l. (“CSP Technologies”). CSP Technologies is a leader in active packaging technology based on proprietary material science expertise for the pharma and food service markets. CSP Technologies operates manufacturing locations in the U.S. and France. The preliminary purchase price was approximately $553.5 million and was funded by cash on hand. As of December 31, 2018, $5 million was held in restricted cash pending the finalization of a working capital adjustment. The $5 million cash amount was released from restriction in January 2019 after the finalization of the working capital adjustment, resulting in a refund of $1.0 million. CSP Technologies contributed net sales of $48.9 million and pretax loss of $10.2 million for the year ended December 31, 2018. Sales of $33.9 million and $15.0 million were reported in the Pharma and Food + Beverage segments, respectively, for the year ended December 31, 2018. Pretax loss of $10.3 million and pretax income of $0.1 million were reported in the Pharma and Food + Beverage segments, respectively, for the year ended December 31, 2018. Included in pretax income is $14.1 million of fair value adjustment amortization for inventory sold during 2018. The aforementioned purchase accounting adjustments and amounts included in the following tables are provisional, as we are in the process of finalizing purchase accounting. For the year ended December 31, 2018, we recognized $9.0 million in transaction costs related to the acquisition of CSP Technologies. These costs are reflected in the selling, research & development and administration section of the Consolidated Statements of Income and within acquisition-related costs as disclosed in Note 18 – Segment Information. On February 29, 2016, we completed our acquisition of MegaPlast GmbH and its subsidiaries along with Megaplast France S.a.r.l and Mega Pumps L.P. (“Mega Airless”). Mega Airless is a leading provider of innovative all-plastic airless dispensing systems for the beauty, personal care and pharmaceutical markets and operates two manufacturing facilities in Germany and one in the United States. The purchase price paid for Mega Airless was approximately $223.2 million ($203.0 million net of cash received) and was funded by cash on hand and borrowings on our revolving line of credit. Mega Airless contributed net sales of $59.4 million and pretax income of $4.1 million for the year ended December 31, 2016. Included in pretax income is a purchase accounting adjustment of $2.6 million related to the fair value of inventory acquired. The results of the acquired business from the acquisition date are included in the accompanying consolidated financial statements and are reported in the Beauty + Home and Pharma reporting segments. For the year ended December 31, 2016, we recognized $5.6 million in transaction costs related to the acquisition of Mega Airless. These costs are reflected in the selling, research & development and administration section of the Consolidated Statements of Income. The following table summarizes the assets acquired and liabilities assumed as of the acquisition date at estimated fair value.
|  | Mega Airless |  | CSP Technologies |
|  | February 29, 2016 |  | August 27, 2018 |
Assets |  |  |  |  |  |  |
Cash and equivalents |  | $ | 20,197 |  | $ | 24,053 |
Accounts receivable |  |  | 8,275 |  |  | 20,847 |
Inventories |  |  | 8,373 |  |  | 42,169 |
Prepaid and other |  |  | 378 |  |  | 3,995 |
Property, plant and equipment |  |  | 47,768 |  |  | 99,194 |
Goodwill |  |  | 105,561 |  |  | 278,020 |
Intangible assets |  |  | 72,106 |  |  | 177,120 |
Other miscellaneous assets |  |  | 8 |  |  | 1,039 |
Liabilities |  |  |  |  |  |  |
Current maturities of long-term obligations |  |  | 319 |  |  | 129 |
Accounts payable and accrued liabilities |  |  | 7,398 |  |  | 31,989 |
Long-term obligations |  |  | 13,402 |  |  | 6,037 |
Deferred income taxes |  |  | 18,366 |  |  | 38,442 |
Retirement and deferred compensation plans |  |  | — |  |  | 1,038 |
Deferred and other non-current liabilities |  |  | — |  |  | 15,344 |
Net assets acquired |  | $ | 223,181 |  | $ | 553,458 |
The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date:
|  | Mega Airless |  | CSP Technologies |
|  | Weighted-Average |  | Estimated |  | Weighted-Average |  | Estimated |
|  | Useful Life |  | Fair Value |  | Useful Life |  | Fair Value |
|  | (in years) |  | of Asset |  | (in years) |  | of Asset |
Acquired technology |  | 15 |  | $ | 10,838 |  | 12 |  | $ | 46,700 |
Customer relationships |  | 11 |  |  | 57,120 |  | 16 |  |  | 113,300 |
Trademarks and trade names |  | 4 |  |  | 4,148 |  | 9 |  |  | 14,600 |
License agreements and other |  |  |  |  |  |  | 11 |  |  | 2,520 |
Total |  |  |  | $ | 72,106 |  |  |  | $ | 177,120 |
Goodwill in the amount of $278.0 million was recorded for the CSP Technologies acquisition, of which $174.3 million and $103.7 million is included in the Pharma and Food + Beverage segments, respectively. Goodwill in the amount of $105.6 million was recorded for the acquisition of Mega Airless, of which $49.8 million and $55.8 million is included in the Beauty + Home and Pharma segments, respectively. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill largely consists of leveraging our commercial presence in selling the CSP Technologies and Mega Airless lines of products in markets where CSP Technologies and Mega Airless did not previously operate and the abilities of CSP Technologies and Mega Airless to maintain their competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. We do not expect any of the goodwill will be deductible for tax purposes. The unaudited pro forma results presented below include the effects of the CSP Technologies acquisition as if it had occurred as of January 1, 2017. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as intangible asset amortization, fair value adjustments for inventory and financing costs related to the change in our debt structure. The 2018 pro forma earnings were adjusted to exclude $16.7 million after tax ($22.0 million pretax) of transaction and other costs. The aforementioned costs include compensation, consulting, legal and advisory fees. The 2018 pro forma earnings were also adjusted to exclude $10.9 million after tax ($14.1 million pretax) of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. The 2017 pro forma earnings were adjusted to include these adjustments. The unaudited pro forma results presented below include the effects of the Mega Airless acquisition as if it had occurred as of January 1, 2015. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as the amortization associated with estimates for the acquired intangible assets and fair value adjustments for inventory. The 2016 pro forma earnings were adjusted to exclude $4.2 million after tax ($5.6 million pretax) of transaction costs, including consulting, legal, and advisory fees. The 2016 pro forma earnings were also adjusted to exclude $1.7 million after tax ($2.6 million pretax) of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the dates indicated.
Years Ended December 31, |  | 2018 |  | 2017 |  | 2016 |
Net Sales |  | $ | 2,857,765 |  | $ | 2,605,095 |  | $ | 2,340,000 |
Net Income Attributable to AptarGroup Inc. |  |  | 208,717 |  |  | 230,753 |  |  | 213,000 |
Net Income per common share — basic |  |  | 3.34 |  |  | 3.70 |  |  | 3.39 |
Net Income per common share — diluted |  |  | 3.21 |  |  | 3.57 |  |  | 3.29 |
On May 1, 2018, we acquired 100% of the common stock of Reboul, a French manufacturer specializing in stamping, decorating and assembling metal and plastic packaging for the cosmetics and luxury markets, for an initial purchase price of approximately $3.6 million (exclusive of $112 thousand of cash acquired) (the “Reboul Acquisition”). The results of Reboul’s operations have been included in the consolidated financial statements within our Beauty + Home segment since the date of acquisition. As part of the Reboul Acquisition, we were obligated to pay to the selling shareholders of Reboul certain contingent consideration based on 2018 EBITDA as defined in the purchase agreement. These targets were not achieved and we did not pay any contingent consideration. In May 2018, we invested $10.0 million in preferred equity stock of Reciprocal Labs Corporation, doing business as Propeller Health, consistent with measurement alternative guidance described in Note 1 above. No impairment charge was recorded during 2018 against this investment. We recorded a gain of approximately $6.5 million during the fourth quarter of 2018 by adjusting the carrying amount to its expected sales proceeds as this investment was ultimately sold during January 2019. In February 2017, we acquired a 20% minority interest in Kali Care, Inc. (“Kali Care”) for $5.0 million. Kali Care is a Silicon Valley-based technology company, which provides digital monitoring systems for ophthalmic medication. Kali Care’s sensing technology allows clinicians to collect real time compliance data and is a powerful tool for ophthalmologists in managing the care of their patients and represents an additional investment into connected devices for our Pharma applications. This investment is being accounted for under the equity method of accounting from the date of acquisition. There were no indications of impairment for the twelve months ended December 31, 2018.

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