XML 23 R10.htm IDEA: XBRL DOCUMENT
v3.20.2

ACQUISITIONS | 12 Months Ended
--- | ---
May 31, 2020
Business Combinations [Abstract] |
ACQUISITIONS | 2. ACQUISITIONS On October 26, 2018, we acquired Pinnacle Foods Inc. ("Pinnacle"), a branded packaged foods company specializing in shelf-stable and frozen foods. Pursuant to the Agreement and Plan of Merger, dated as of June 26, 2018 (the "Merger Agreement"), among the Company, Pinnacle, and Patriot Merger Sub Inc., a wholly-owned subsidiary of the Company that ceased to exist at the effective time of the merger, each outstanding share of Pinnacle common stock was converted into the right to receive $43.11 per share in cash and 0.6494 shares of common stock, par value $5.00 per share, of the Company ("Company Shares") (together, the "Merger Consideration"), with cash payable in lieu of fractional shares of Company Shares. The total amount of consideration paid in connection with the acquisition was approximately $8.03 billion and consisted of: (1) cash of $5.17 billion ($5.12 billion net of cash acquired); (2) 77.5 million Company Shares, with an approximate value of $2.82 billion, issued out of the Company's treasury; and (3) replacement awards issued to former Pinnacle employees representing the fair value attributable to pre-combination service (see Note 13) of $51.1 million. In connection with the acquisition, we issued long-term debt of $8.33 billion (see Note 4) (which included funding under a new term loan agreement) and received cash proceeds of $575.0 million ($555.7 million net of related fees) from the issuance of common stock in an underwritten public offering. We used such proceeds for the payment of the cash portion of the Merger Consideration, the repayment of Pinnacle debt acquired, the refinancing of certain Conagra Brands debt, and the payment of related fees and expenses. The following table summarizes our final allocation of the total purchase consideration to the fair values of the assets acquired and liabilities assumed at the acquisition date.
|  | October 26, 2018 |
Cash and cash equivalents |  | $ | 47.0 |
Receivables |  |  | 202.8 |
Inventories |  |  | 649.3 |
Prepaid expenses and other current assets |  |  | 15.0 |
Property, plant and equipment |  |  | 719.5 |
Goodwill |  |  | 7,026.0 |
Brands, trademarks and other intangibles |  |  | 3,519.5 |
Other assets |  |  | 25.4 |
Current liabilities |  |  | (607.6 | )
Senior long-term debt, excluding current installments |  |  | (2,671.3 | )
Noncurrent deferred tax liabilities |  |  | (810.0 | )
Other noncurrent liabilities |  |  | (81.6 | )
Total assets acquired and liabilities assumed |  | $ | 8,034.0 |
During fiscal 2020, we made adjustments to our initial allocations, which resulted in an increase to goodwill of $10.1 million primarily as the result of changes in the values of certain inventory, deferred income taxes, and other noncurrent liabilities as we refined our fair value estimates. These changes did not have a significant impact on our net income. Goodwill represents the excess of the consideration transferred over the fair values of the assets acquired and liabilities assumed and is primarily attributable to synergies and intangible assets such as assembled workforce which are not separately recognizable. Of the total goodwill, $236.7 million is deductible for tax purposes. Amortizable brands, trademarks and other intangibles totaled $668.7 million and have a weighted average estimated useful life of 25 years. The following unaudited pro forma financial information presents the combined results of operations as if the acquisition of Pinnacle had occurred on May 29, 2017, the beginning of fiscal year 2018. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.
|  | 2019 |  |  | 2018 |
Pro forma net sales |  | $ | 10,788.1 |  |  | $ | 11,034.2 |
Pro forma net income from continuing operations attributable to Conagra Brands, Inc. |  | $ | 803.8 |  |  | $ | 1,089.7 |
The pro forma results include adjustments for amortization of acquired intangible assets, depreciation, and interest expense on debt issued to finance the acquisition as well as the related income taxes. The pro forma results also include the following material nonrecurring adjustments, along with the related income tax effect of the adjustments:
| • | Acquisition related costs incurred by the Company of $62.7 million during fiscal 2019 were excluded and assumed to have been incurred at the beginning of fiscal 2018. Acquisition related costs incurred by Pinnacle of $66.8 million during fiscal 2019 were excluded from the pro forma results.
| • | Non-recurring expense of $53.0 million for fiscal 2019 related to the fair value adjustment to acquisition-date inventory estimated to have been sold was removed and $54.1 million of expense was included in the results for fiscal 2018.
| • | Non-recurring expense of $45.7 million for fiscal 2019 related to securing bridge financing for the acquisition were excluded and assumed to have been incurred at the beginning of fiscal 2018.
In February 2018, we acquired the Sandwich Bros. of Wisconsin® business, maker of frozen breakfast and entree flatbread pocket sandwiches, for a cash purchase price of $87.3 million, net of cash acquired, including working capital adjustments. Approximately $57.8 million has been classified as goodwill and $9.7 million and $7.1 million have been classified as non-amortizing and amortizing intangible assets, respectively. The amount allocated to goodwill is deductible for tax purposes. The business is included in the Refrigerated & Frozen segment. In October 2017, we acquired Angie's Artisan Treats, LLC, maker of Angie's® BOOMCHICKAPOP® ready-to-eat popcorn, for a cash purchase price of $249.8 million, net of cash acquired, including working capital adjustments. Approximately $156.7 million has been classified as goodwill, of which $95.4 million is deductible for income tax purposes. Approximately $73.8 million and $10.3 million of the purchase price have been allocated to non-amortizing and amortizing intangible assets, respectively. The business is primarily included in the Grocery & Snacks segment, and to a lesser extent within the International segment. For each of these acquisitions, the amounts allocated to goodwill were primarily attributable to anticipated synergies, product portfolios, and other intangibles that do not qualify for separate recognition.

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration