Acquisitions

12 Months Ended

Dec. 31, 2020

Automated Packaging Systems, LLC

On August 1, 2019 the Company acquired 100% of the limited liability company interest in Automated Packaging Systems, LLC, formerly Automated Packaging Systems, Inc., a manufacturer of automated bagging systems. The acquisition is included in our Protective reporting segment. Automated Packaging Systems offers opportunities to expand the Company's automated solutions and into adjacent markets.

Cash paid for Automated Packaging Systems was $441.4 million in cash. The opening balance sheet included $58.2 million of assumed liabilities in connection with a deferred incentive compensation plan for Automated Packaging System's European employees. Of this amount $19.0 million and $19.7 million was paid during the years ended December 31, 2020 and 2019, respectively. Sealed Air is expected to make the remaining payment to the deferred incentive compensation plan participants in 2021.

The purchase price was primarily funded with proceeds from the incremental term facility provided for under an amendment to our Third Amended and Restated Credit Agreement, as described in Note 14, "Debt and Credit Facilities," of the Notes. For the years ended December 31, 2020 and 2019, transaction expenses recognized for the Automated Packaging Systems acquisition were $0.3 million and $3.3 million, respectively. These expenses are included within selling, general and administrative expenses in the Consolidated Statements of Operations.

The following table summarizes the consideration transferred to acquire Automated Packaging Systems and the allocation of the purchase price among the assets acquired and liabilities assumed, including measurement period adjustments recorded through the finalized purchase price allocation on August 1, 2020.


	Revised Preliminary Allocation		Measurement Period		Final Allocation
(In millions)	As of August 1, 2019		Adjustments		As of September 30, 2020
Total consideration transferred	$	445.7	$	(4.3)	$	441.4

Assets:
Cash and cash equivalents	16.0		(0.2)		15.8
Trade receivables, net	37.3		—		37.3
Other receivables	0.3		—		0.3
Inventories, net	40.7		(0.7)		40.0
Prepaid expenses and other current assets	2.3		—		2.3
Property and equipment, net(1)	76.9		8.7		85.6
Identifiable intangible assets, net(1)	81.1		(0.6)		80.5
Goodwill	261.3		(14.6)		246.7
Operating lease right-of-use-assets	—		4.3		4.3
Other non-current assets	24.7		1.1		25.8
Total assets	$	540.6	$	(2.0)	$	538.6
Liabilities:
Accounts payable	12.0		—		12.0
Current portion of long-term debt	2.6		(0.5)		2.1
Current portion of operating lease liabilities	—		1.5		1.5

Other current liabilities	56.2		(3.3)		52.9
Long-term debt, less current portion	4.3		(0.3)		4.0
Long-term operating lease liabilities, less current portion	—		2.8		2.8
Deferred taxes	—		0.5		0.5
Other non-current liabilities	19.8		1.6		21.4
Total liabilities	$	94.9	$	2.3	$	97.2

(1)In the Preliminary Allocation as of August 1, 2019, $2.4 million of software was initially recorded as computer hardware within Property and equipment, net as disclosed in the 2019 Form 10-K. The asset represents software acquired and has been reclassified in identifiable intangible assets, net within Revised Preliminary Allocation in the table above.

Measurement period adjustments recorded in the year ended December 31, 2020 through finalization of the purchase price allocation on August 1, 2020 were primarily a result of a favorable net working capital and purchase price settlement with the seller of $4.3 million during the first quarter of 2020.

The following table summarizes the identifiable intangible assets, net and their useful lives.


	Amount		Useful life
	(in millions)		(in years)
Customer relationships	$	28.9	13.0
Trademarks and tradenames	15.6		9.1
Capitalized software	2.4		3.0
Technology	29.6		6.4
Backlog	4.0		0.4
Total intangible assets with definite lives	$	80.5

Goodwill is a result of the expected synergies and cross-selling opportunities that this acquisition is expected to provide for the Company, as well as the expected growth potential in acquired automated and sustainable solutions. Goodwill allocated to Automated Packaging System's U.S. entities is deductible for tax purposes. Goodwill allocated to Automated Packaging

Systems' foreign entities is not deductible for tax purposes. The goodwill balance has been recorded to the Protective reportable segment.

Other non-current assets at the opening balance sheet date includes the net overfunded position of a closed defined benefit pension plan in the United Kingdom. At December 31, 2020, the plan was in an underfunded position and is classified within other non-current liabilities on our Consolidated Balance Sheet. Refer to Note 17, "Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans," for additional information on the Company's other defined benefit pension plans.

In conjunction with the acquisition and subsequent integration, the Company expects to incur restructuring charges. No restructuring accrual is included in our opening balance sheet as the liability did not exist at the time of acquisition. Refer to Note 12, "Restructuring Activities," for more detail on the Company's restructuring activity.

The inclusion of Automated Packaging Systems in our consolidated financial statements is not deemed material with respect to the requirement to provide pro forma results of operations in ASC 805. As such, pro forma information is not presented.

Other 2019 Acquisition Activity

During the second quarter of 2019, Food had acquisition activity resulting in a total purchase price paid of $23.4 million. The Company allocated the consideration transferred to the fair value of assets acquired and liabilities assumed, resulting in an allocation to goodwill of $6.0 million. The final purchase price adjustments resulting in an increase to goodwill of $0.3 million were recorded in the third quarter of 2019. Identifiable intangible assets acquired were not material.

Acquisition of AFP, Inc,

On August 1, 2018, the Company acquired AFP, Inc., a privately held fabricator of foam, corrugated, molded pulp and wood packaging solutions. The acquisition is included in our Protective reporting segment. This acquisition expands our protective packaging offerings in the electronic, transportation and industrial markets with custom engineered applications. We acquired 100% of AFP shares for an estimated consideration of $74.1 million, excluding $3.3 million of cash acquired.

The following table summarizes the consideration transferred to acquire AFP and the final allocation of the purchase price among the assets acquired and liabilities assumed.


	Preliminary Allocation		Measurement Period		Final Allocation
(In millions)	As of August 1, 2018		Adjustments		As of September 30, 2019
Total consideration transferred	$	70.8	$	3.3	$	74.1

Assets:
Cash and cash equivalents	2.9		0.4		3.3
Trade receivables, net	30.8		—		30.8
Inventories, net	7.1		—		7.1
Prepaid expenses and other current assets	0.7		—		0.7
Property and equipment, net	3.5		(0.4)		3.1
Identifiable intangible assets, net	18.6		0.7		19.3
Goodwill	21.6		1.0		22.6
Other non-current assets	0.7		(0.4)		0.3
Total assets	$	85.9	$	1.3	$	87.2
Liabilities:
Current portion of long-term debt	—		0.1		0.1
Accounts payable	13.8		(2.2)		11.6

Other current liabilities	1.3		(0.1)		1.2
Long-term debt, less current portion	—		0.2		0.2

Total liabilities	$	15.1	$	(2.0)	$	13.1

The following table summarizes the identifiable intangible assets, net and their useful lives


	Amount		Useful life
	(in millions)		(in years)
Customer relationships	$	14.9	11
Trademarks and tradenames	4.4		5



Total intangible assets with definite lives	$	19.3