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Acquisitions and Dispositions | 6 Months Ended
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Jun. 30, 2020
Business Combinations [Abstract] |
Acquisitions and Dispositions | Acquisitions and Dispositions Acquisitions We account for business combinations using the acquisition method. Under the acquisition method of accounting, assets acquired and liabilities assumed from these operations are recorded at fair value on the date of acquisition. The condensed consolidated statements of operations include the results of operations for each acquired entity from the date of acquisition. G4S plc ("G4S") Acquisitions On February 26, 2020, we announced that we agreed to acquire the majority of the cash management operations of U.K.-based G4S, with closings planned in multiple phases in 2020. In March 2020, we acquired 100% of the capital stock of G4S International Logistics Group Limited, a company which directly or indirectly owns controlling interests in multiple businesses providing secure international transportation of valuables. In April 2020, we acquired cash management operations from G4S located in the Netherlands, Belgium, Ireland, Hong Kong, Cyprus, Romania, the Czech Republic, Malaysia and the Dominican Republic. In June 2020, we acquired G4S' cash management operations in the Philippines. For the majority of the acquisitions in the second quarter of 2020, we acquired 100% of the ownership interests. In Malaysia, the Dominican Republic and the Philippines, we acquired ownership interests of less than 100%. We believe that we meet the accounting criteria for consolidating these subsidiaries. In the aggregate, the purchase consideration for the G4S acquisitions in the first half of 2020 is $694.7 million. The operations we have acquired through June 30, 2020, which represent approximately 80% of the total estimated purchase price, generate approximately $690 million in annual revenues. The contingent consideration noted in the following table below is related to the acquisition of the Malaysia operations. The consideration will be paid when minimum dividend distributions are received by Brink's relating to cash on the balance sheets of the Malaysia subsidiaries as of the acquisition date. We used a probability-weighted approach to estimate the fair value of the contingent consideration. The fair value of the contingent consideration reflected in the table below is the full $38 million that remains potentially payable as of June 30, 2020 as we believe it is unlikely that the contingent consideration payments will be reduced. We have provisionally estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. The amounts reported are considered provisional as we are completing the valuations that are required to allocate the purchase price in areas such as property and equipment, intangible assets, lease-related assets and liabilities, deferred taxes and goodwill. As a result, the allocation of the provisional purchase price may change in the future.
(In millions) | Estimated Fair Value at Acquisition Date
Fair value of purchase consideration |
Cash paid through June 30, 2020 | $ | 651.2 |
Contingent consideration | 38.0 |
Liabilities assumed from seller | 9.4 |
Receivable from seller | (3.9 | )
Fair value of purchase consideration | $ | 694.7 |
Fair value of net assets acquired |
Cash | $ | 214.3 |
Restricted cash | 30.1 |
Accounts receivable | 129.5 |
Other current assets | 22.6 |
Property and equipment, net | 123.1 |
Right-of-use assets, net | 72.0 |
Intangible assets(a) | 157.7 |
Goodwill(b) | 370.3 |
Other noncurrent assets | 19.3 |
Current liabilities | (229.8 | )
Lease liabilities | (58.2 | )
Other noncurrent liabilities | (88.4 | )
Fair value of net assets acquired | $ | 762.5 |
Less: Fair value of noncontrolling interest | (67.8 | )
Fair value of purchase consideration | $ | 694.7 |
(a) | Intangible assets are composed of customer relationships ($158 million fair value and 15 year amortization period).
(b) | Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating G4S operations with our existing operations. Goodwill has been provisionally assigned to the Global Markets-EMEA reporting unit ($257 million), the Global Markets-Asia reporting unit ($97 million) and the Global Markets-South America reporting unit ($5 million). Approximately $12 million of goodwill has not been assigned to a reporting unit as of June 30, 2020. We do not currently expect goodwill in these reporting units to be deductible for tax purposes.
Rodoban Transportes Aereos e Terrestres Ltda., Rodoban Servicos e Sistemas de Seguranca Ltda., and Rodoban Seguranca e Transporte de Valores Ltda ("Rodoban") On January 4, 2019, we acquired 100% of the capital stock of Rodoban in Brazil for $134 million. Rodoban provides cash-in-transit, money processing and ATM services and generates annual revenues of approximately $80 million. The Rodoban business expanded our operations in southeastern Brazil and is integrated with our existing Brink's Brazil operations. Rodoban has approximately 2,900 employees, 13 branches and about 190 armored vehicles across its operations. We estimated fair values for the assets purchased, liabilities assumed and purchase consideration as of the date of the acquisition in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. We finalized our purchase price accounting in the fourth quarter of 2019. There were no significant changes to our fair value estimates of the net assets acquired of Rodoban.
(In millions) | Fair Value at Acquisition Date
Fair value of purchase consideration |
Cash paid through June 30, 2020 | $ | 135.7 |
Indemnification asset | (1.9 | )
Fair value of purchase consideration | $ | 133.8 |
Fair value of net assets acquired |
Cash | $ | 1.4 |
Accounts receivable | 8.9 |
Other current assets | 0.5 |
Property and equipment, net | 2.4 |
Intangible assets(a) | 49.0 |
Goodwill(b) | 85.1 |
Other noncurrent assets | 5.8 |
Current liabilities | (11.4 | )
Noncurrent liabilities | (7.9 | )
Fair value of net assets acquired | $ | 133.8 |
(a) | Intangible assets are composed of customer relationships ($47 million fair value and 11 year amortization period), trade name ($1 million fair value and 1 year amortization period), and non-compete agreement ($1 million fair value and 5 year amortization period).
(b) | Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating Rodoban’s operations with our existing Brink’s Brazil operations. All of the goodwill has been assigned to the Brazil reporting unit and is expected to be deductible for tax purposes.
Other acquisitions in 2019 On June 12, 2019, we acquired 100% of the capital stock of Balance Innovations, LLC and its wholly owned subsidiary, Balance Innovations Services, Inc. (together "BI"). BI develops and licenses software that provides real-time data to optimize operations for general retail and convenience store industries throughout the United States and Canada. This acquisition enhances our ability to deliver technology-enabled, end-to-end retail cash management services. On June 14, 2019, we acquired 100% of the capital stock of Comercio Eletronico Facil Ltda. ("COMEF"), a Brazil-based company. COMEF offers bank correspondent services and bill payment processing and is expected to supplement our existing Brazilian payment services businesses. On September 30, 2019, we acquired 100% of the capital stock of Transportadora de Valores del Sur Limitada and its wholly owned subsidiary, TVS Pagos, Recaudos y Procesos S.A.S. (together "TVS"). TVS provides cash in transit and money processing services in Colombia. This acquisition is expected to provide opportunities for branch consolidation and route efficiencies and position our existing Colombian business as well as TVS to more effectively service our customers. The aggregate purchase price of these three business acquisitions (BI, COMEF and TVS) was approximately $49 million. Together, these three acquired operations have approximately 1,300 employees. For these three business acquisitions (BI, COMEF and TVS), we estimated fair values for the assets purchased and liabilities assumed as of the date of the acquisitions. These estimated amounts are aggregated in the following table. The determination of estimated fair value required management to make significant estimates and assumptions. We finalized our purchase price accounting in the second quarter of 2020 for BI and COMEF and there were no significant changes to our fair value estimates of the net assets acquired for these acquisitions. The amounts reported for TVS are considered provisional as we continue to finalize our purchase price allocation for that acquisition.
(In millions) | Estimated Fair Value at Acquisition Date
Fair value of purchase consideration |
Cash paid through June 30, 2020 | $ | 60.2 |
Contingent consideration | 1.6 |
Indemnification asset | (12.9 | )
Fair value of purchase consideration | $ | 48.9 |
Fair value of net assets acquired |
Cash | $ | 6.5 |
Accounts receivable | 4.5 |
Property and equipment, net | 7.1 |
Intangible assets(a) | 24.4 |
Goodwill(b) | 33.8 |
Other current and noncurrent assets | 1.9 |
Current liabilities | (15.2 | )
Noncurrent liabilities | (14.1 | )
Fair value of net assets acquired | $ | 48.9 |
(a) | Intangible assets are composed of developed technology, customer relationships and trade names.
(b) | Consists of intangible assets that do not qualify for separate recognition, combined with synergies expected from integrating these acquired operations into our existing operations. The goodwill from these acquisitions have been assigned to the following reporting units: BI (U.S.), COMEF (Brazil) and TVS (Global Markets - South America). We expect goodwill related to BI to be deductible for tax purposes. We do not expect goodwill related to COMEF or TVS to be deductible for tax purposes.
Actual and Pro forma disclosures Below are the actual results included in Brink's consolidated results for the businesses we acquired in the first six months of 2020.
(In millions) | Revenue |  | Net income (loss) attributable to Brink's
Three months ended June 30, 2020 |  |  |
G4S | $ | 123.5 |  |  | 2.6 |
Total | $ | 123.5 |  |  | 2.6 |
Six months ended June 30, 2020 |  |  |
G4S | $ | 128.9 |  |  | 3.0 |
Total | $ | 128.9 |  |  | 3.0 |
The pro forma consolidated results of Brink’s presented below reflect a hypothetical ownership as of January 1, 2018 for the businesses we acquired during 2019 and a hypothetical ownership as of January 1, 2019 for the businesses we acquired in the first six months of 2020.
(In millions) | Revenue |  | Net income (loss) attributable to Brink's
Pro forma results of Brink's for the three months ended June 30, |  |  |
2020 |  |  |
Brink's as reported | $ | 826.0 |  |  | 12.9 |
G4S(a) | 19.5 |  |  | (0.2 | )
Total | $ | 845.5 |  |  | 12.7 |
2019 |  |  |
Brink's as reported | $ | 914.0 |  |  | 12.5 |
G4S(a) | 172.5 |  |  | 2.3 |
Other acquisitions(a) | 9.0 |  |  | 0.5 |
Total | $ | 1,095.5 |  |  | 15.3 |
Pro forma results of Brink's for the six months ended June 30, |  |  |
2020 |  |  |
Brink's as reported | $ | 1,698.8 |  |  | 14.7 |
G4S(a) | 166.5 |  |  | (1.4 | )
Total | $ | 1,865.3 |  |  | 13.3 |
2019 |  |  |
Brink's as reported | $ | 1,819.0 |  |  | 26.2 |
G4S(a) | 345.0 |  |  | 4.6 |
Rodoban(a) | 0.6 |  |  | — |
Other 2019 acquisitions(a) | 21.9 |  |  | 1.0 |
Total | $ | 2,186.5 |  |  | 31.8 |
(a) | Represents amounts prior to acquisition by Brink's.
Acquisition costs We have incurred $16.1 million in transaction costs related to business acquisitions in the first six months of 2020 (compared to $1.9 million in the first six months of 2019). These costs are classified in the condensed consolidated statements of operations as selling, general and administrative expenses. Dispositions On January 1, 2020, we sold 100% of our ownership interest in a French security services company for a net sales price of approximately $11 million. We recognized a $4.7 million gain on the sale of this business, which is reported in interest and other nonoperating income (expense) in the condensed consolidated statements of operations. The French security services company was part of the Rest of World reportable segment and reported revenues of $3 million in 2019.

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- 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
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