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Acquisitions | 3 Months Ended
--- | ---
Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions LB Holdco, Inc. Acquisition On February 1, 2023, SEE acquired 100% of the outstanding shares of capital stock of LB Holdco, Inc., the parent company of Liquibox, Inc. (collectively, "Liquibox"), a pioneer, innovator and manufacturer of Bag-in-Box sustainable fluids & liquids packaging and dispensing solutions for fresh food, beverage, consumer goods and industrial end-markets. The acquisition is included in our Food reporting segment. This acquisition accelerates our CRYOVAC® brand Fluids & Liquids business. CRYOVAC® technology, scale and market access provide a significant source of synergies. This acquisition contributes to and fast tracks SEE’s transformation to become a world-class, digitally driven company automating sustainable packaging solutions. Consideration paid was approximately $1.17 billion in cash, subject to customary adjustments. We financed the consideration paid and related fees and expenses through borrowings under our senior secured credit facility, proceeds from the issuance of senior notes, and cash on hand. See Note 13, "Debt and Credit Facilities," for additional details. For the three months ended March 31, 2023, acquisition related expenses recognized for the Liquibox acquisition were $11.9 million. These expenses are included within Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations. The following table summarizes the consideration transferred to acquire Liquibox and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed. The allocation of purchase price is still preliminary as the Company finalizes the final purchase price adjustment with the seller and finalizes other aspects of the valuation including deferred taxes and intangible valuations. Preliminary estimates will be finalized within one year of the date of acquisition.
|  |  |  |  |  | Preliminary Allocation
(In millions) |  |  |  |  |  | As of February 1, 2023
Total consideration transferred |  |  |  |  |  | $ | 1,169.2 |
Assets acquired: |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  |  | 21.2 |
Trade receivables |  |  |  |  |  | 48.6 |
Inventories |  |  |  |  |  | 61.6 |
Prepaid expenses and other current assets |  |  |  |  |  | 15.8 |
Property and equipment |  |  |  |  |  | 101.1 |
Identifiable intangible assets |  |  |  |  |  | 342.1 |
Operating lease right-of-use-assets |  |  |  |  |  | 15.1 |
Other non-current assets |  |  |  |  |  | 9.5 |
Total assets acquired |  |  |  |  |  | $ | 615.0 |
Liabilities assumed: |  |  |  |  |  |
Accounts payable |  |  |  |  |  | 27.0 |
Current portion of long-term debt |  |  |  |  |  | 0.1 |
Current portion of operating lease liabilities |  |  |  |  |  | 3.7 |
Other current liabilities |  |  |  |  |  | 28.4 |
Long-term debt, less current portion |  |  |  |  |  | 5.1 |
Long-term operating lease liabilities, less current portion |  |  |  |  |  | 11.4 |
Deferred taxes |  |  |  |  |  | 92.2 |
Other non-current liabilities |  |  |  |  |  | 6.6 |
Total liabilities assumed |  |  |  |  |  | $ | 174.5 |
Net assets acquired |  |  |  |  |  | 440.5 |
Goodwill |  |  |  |  |  | $ | 728.7 |
The following table summarizes the identifiable intangible assets and their useful lives.
|  | Amount |  | Useful life
| (In millions) |  | (In years)
Customer relationships |  | $ | 180.7 |  |  | 11.0
Trademarks and tradenames |  | 26.0 |  |  | 10.0
Software |  | 5.2 |  |  | 2.0
Technology |  | 130.2 |  |  | 12.0
Total intangible assets with definite lives |  | $ | 342.1 |  |  |
Goodwill is a result of the expected synergies that are expected to originate from the combination of Cryovac and Liquibox solutions for the Company, as well as growth of our sustainable packaging portfolio. Goodwill is not deductible for tax purposes. The goodwill balance associated with Liquibox is included in the Food reportable segment. Liquibox Supplemental Information The following table presents the amounts of net sales and loss attributed to Liquibox since the acquisition date that are included in our Condensed Consolidated Statements of Operations for the three months ended March 31, 2023:
(In millions) | February 1, 2023 through March 31, 2023
Net sales | $ | 57.3 |
Net loss | $ | (5.4) |
Pro Forma Financial Information The following table presents the Company’s unaudited pro forma financial information for the three months ended March 31, 2023 and 2022, assuming the acquisition of Liquibox had occurred on January 1, 2022. The information below reflects pro forma adjustments based on available information and certain assumptions that SEE believes are factual and supportable. The unaudited pro forma information is not necessarily indicative of the results that might have occurred had the transaction actually taken place on January 1, 2022 and is not intended to be a projection of future results and gives no effect to any future synergistic benefits that may result from the combination or the costs of integrating the acquired operations with those of the Company.
|  | Three Months Ended March 31,
(In millions) |  | 2023 |  | 2022
Net sales |  | $ | 1,374.4 |  |  | $ | 1,504.3 |
Net earnings |  | $ | 70.0 |  |  | $ | 113.7 |
The unaudited pro forma financial information includes, where applicable, adjustments for (i) additional expense from the fair value step-up of inventory, (ii) additional amortization expense related to acquired intangible assets, (iii) additional depreciation expense related to acquired property and equipment, (iv) transaction costs and other one-time non-recurring costs, (v) additional interest expense for borrowings related to the acquisition and amortization associated with fair value adjustments of debt assumed, and (vi) associated tax-related impacts of adjustments. Acquisition of Foxpak Flexibles Ltd. On February 2, 2022, SEE acquired Foxpak Flexibles Ltd. (“Foxpak”), a privately-owned Irish packaging solutions company. Foxpak is a digital printing pioneer that partners with brands to deliver highly decorated packaging solutions; stand-up and spout pouches, and sachets that serve a variety of markets including food retail, pet food, seafood, and snacks. This transaction resulted in a purchase price paid of $9.7 million, including the final purchase price adjustments that were recorded in the second and fourth quarters of 2022. The Company allocated the consideration transferred to the fair value of assets acquired and liabilities assumed, resulting in an allocation to goodwill of $5.2 million and an allocation to identifiable intangible assets of $2.7 million. The acquisition is included in our Food reporting segment. Goodwill is not deductible for tax purposes. A deferred tax liability of $0.3 million on identifiable intangible assets was recorded on the opening balance sheet. The Foxpak acquisition was not material to our condensed 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 https://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 https://asc.fasb.org/topic&trid=2303972 + Details
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