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Acquisitions and Divestitures | 12 Months Ended
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Oct. 31, 2019
Business Combinations [Abstract] |
Acquisitions and Divestitures | ACQUISITIONS AND DIVESTITURES Acquisitions The Company accounts for acquisitions in accordance with ASC 805, "Business Combinations". The estimated fair values of all assets acquired and liabilities assumed in the acquisitions are provisional and may be revised as a result of additional information obtained during the measurement period of up to one year from the acquisition date. Caraustar Acquisition On February 11, 2019, the Company completed its acquisition of Caraustar (the "Caraustar Acquisition"), a leader in the production of coated and uncoated recycled paperboard, which is used in a variety of applications that include industrial products (tubes and cores, construction products, protective packaging, and adhesives) and consumer packaging products (folding cartons, set-up boxes, and packaging services). The total purchase price for this acquisition, net of cash acquired, was $1,834.9 million. The Company incurred transaction costs of $62.1 million to complete this acquisition. Of this amount, $34.0 million was recognized immediately in the consolidated statements of income and the remaining $28.1 million in transaction costs was capitalized in accordance with ASC 470, "Debt", and is presented as part of the consolidated balance sheet ($20.8 million within Long-Term Debt and $7.3 million within Other Long-Term Assets). The following table summarizes the consideration transferred to acquire Caraustar and the current preliminary valuation of identifiable assets acquired and liabilities assumed at the acquisition date, as well as measurement period adjustments made during the year ended October 31, 2019.
(in millions) | Amounts Recognized as of the Acquisition Date | Measurement Period Adjustments (1) | Amount Recognized as of Acquisition Date (as Adjusted)
Fair value of consideration transferred |  |  |
Cash consideration | $ | 1,834.9 |  | $ | — |  | 1,834.9 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |
Accounts receivable | 147.0 |  | — |  | 147.0 |
Inventories | 103.9 |  | (1.1 | ) | 102.8 |
Prepaid and other current assets | 21.5 |  | (0.8 | ) | 20.7 |
Intangibles | 717.1 |  | 8.4 |  | 725.5 |
Other long-term assets | 1.3 |  | 5.7 |  | 7.0 |
Properties, plants and equipment | 521.3 |  | (12.4 | ) | 508.9 |
Total assets acquired | 1,512.1 |  | (0.2 | ) | 1,511.9 |
Accounts payable | (99.5 | ) | — |  | (99.5 | )
Accrued payroll and employee benefits | (42.9 | ) | (6.4 | ) | (49.3 | )
Other current liabilities | (21.8 | ) | (6.7 | ) | (28.5 | )
Long-term deferred tax liability | (185.7 | ) | 46.6 |  | (139.1 | )
Pension and post-retirement obligations | (67.1 | ) | — |  | (67.1 | )
Other long-term liabilities | (12.7 | ) | (7.4 | ) | (20.1 | )
Total liabilities assumed | (429.7 | ) | 26.1 |  | (403.6 | )
Total identifiable net assets | $ | 1,082.4 |  | $ | 25.9 |  | $ | 1,108.3 |
Goodwill | $ | 752.5 |  | $ | (25.9 | ) | $ | 726.6 |
(1) The measurement adjustments were primarily due to refinement to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments resulted in a net $25.9 million decrease to Goodwill. The measurement adjustments recorded in 2019 did not have a significant impact on the Company's consolidated statements of income for the year ended October 31, 2019. The Company recognized goodwill related to this acquisition of $726.6 million. The goodwill recognized in this acquisition is attributable to the acquired assembled workforce, expected synergies, and economies of scale, none of which qualify for recognition as a separate intangible asset. Caraustar is reported within the Paper Packaging & Services segment to which the goodwill was assigned. The goodwill is not expected to be deductible for tax purposes. The cost approach was used to determine the fair value for buildings, improvements and equipment, and the market approach was used to determine the fair value for land. The cost approach measures the value by estimating the cost to acquire, or construct, comparable assets and adjusts for age and condition. The Company assigned buildings and improvements a useful life ranging from 1 year to 20 years and equipment a useful life ranging from 1 year to 15 years. Acquired property, plant and equipment will be depreciated over its estimated remaining useful lives on a straight-line basis. The fair value for acquired customer relationship intangibles was determined as of the acquisition date based on estimates and judgments regarding expectations for the future after-tax cash flows arising from the revenue from customer relationships that existed on the acquisition date over their estimated lives, including the probability of expected future contract renewals and revenue, less a contributory assets charge, all of which is discounted to present value. The fair value of the trade name intangible assets were determined utilizing the relief from royalty method which is a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade names and discounted to present value using an appropriate discount rate. Acquired intangible assets will be amortized over the estimated useful lives, primarily on a straight-line basis. The following table summarizes the current preliminary purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired:
(in millions) | Current Preliminary Purchase Price Allocation | Weighted Average Estimated Useful Life
Customer relationships | $ | 708.0 |  | 15.0
Trademarks | 15.0 |  | 3.0
Other | 2.5 |  | 4.6
Total intangible assets | $ | 725.5 |  |
Caraustar's results of operations have been included in the Company's financial statements for the period subsequent to the acquisition date of February 11, 2019. Caraustar contributed net sales of $936.3 million for the year ended October 31, 2019. The following unaudited supplemental pro forma data presents consolidated information as if the acquisition had been completed on November 1, 2017. These amounts were calculated after adjusting Caraustar's results to reflect interest expense incurred on the debt to finance the acquisition, additional depreciation and amortization that would have been charged assuming the fair value of property, plant and equipment and intangible assets had been applied from November 1, 2017, the adjusted tax expense, and related transaction costs of $34.0 million. These adjustments also include an additional one-time charge of $9.0 million for the fair value adjustment for inventory acquired.
| Twelve Months Ended October 31,
(in millions, except per share amounts) | 2019 |  | 2018
Pro forma net sales | $ | 4,958.8 |  |  | $ | 5,249.4 |
Pro forma net (loss) income attributable to Greif, Inc. | $ | 154.8 |  |  | $ | 152.7 |
Basic earnings per share attributable to Greif, Inc. common shareholders: |  |  |
Class A common stock | $ | 2.62 |  |  | $ | 2.60 |
Class B common stock | $ | 3.92 |  |  | $ | 3.88 |
Diluted earnings per share attributable to Greif, Inc. common shareholders: |  |  |
Class A common stock | $ | 2.62 |  |  | $ | 2.59 |
Class B common stock | $ | 3.92 |  |  | $ | 3.88 |
The unaudited supplemental pro forma financial information is based on the Company's preliminary assignment of purchase price and therefore subject to adjustment upon finalizing the purchase price assignment. The pro forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on the assumed completion dates, nor are they indicative of future results. The pro forma results do not include the Tholu Acquisition, as the impact of this acquisition is not material to prior year results of operations. The Company has not yet finalized the determination of the fair value of assets acquired and liabilities assumed, including income taxes and contingencies. The Company expects to finalize these amounts within one year of the acquisition date. The current preliminary estimate of fair value and purchase price allocation were based on information available at the time of closing the acquisition, and the Company continues to evaluate the underlying inputs and assumptions that are being used in fair value estimates. Accordingly, these preliminary estimates are subject to adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of closing the acquisition. Tholu Acquisition On June 11, 2019, the Company completed its acquisition of Tholu (the “Tholu Acquisition”). Tholu is a Netherlands-based market leader in IBC rebottling, reconditioning and distribution. The total purchase price for this acquisition was $52.2 million, net of cash acquired of $2.1 million, of which $25.1 million was paid upon closing and the remaining $29.2 million was deferred according to a set payment schedule. The current portion of the deferred obligation is $2.5 million, recorded in Other Current Liabilities, and the remaining $26.7 million has been recorded in Other Long-Term Liabilities within the consolidated balance sheets. The legal form of the Tholu Acquisition is a joint venture with the former Tholu owner, but due to the economic structure of the transaction the Company is deemed to be the 100% economic owner, and under GAAP, the Company will record and report 100% of all future income or loss. The following table summarizes the consideration transferred to acquire Tholu and the current preliminary valuation of identifiable assets acquired and liabilities assumed at the acquisition date, as well as measurement period adjustments made during the year ended October 31, 2019.
(in millions) | Amounts Recognized as of the Acquisition Date | Measurement Period Adjustments (2) | Amount Recognized as of Acquisition Date (as Adjusted)
Fair value of consideration transferred |  |  |
Cash consideration | $ | 25.1 |  | $ | — |  | $ | 25.1 |
Deferred payments | $ | 29.2 |  | — |  | $ | 29.2 |
Cash received | $ | (2.1 | ) | $ | — |  | $ | (2.1 | )
Total consideration | $ | 52.2 |  | $ | — |  | $ | 52.2 |
Recognized amounts of identifiable assets acquired and liabilities assumed |  |  |
Accounts receivable | 7.3 |  | — |  | $ | 7.3 |
Inventories | 3.0 |  | 0.4 |  | $ | 3.4 |
Intangibles | 24.1 |  | — |  | $ | 24.1 |
Properties, plants and equipment | 6.4 |  | — |  | $ | 6.4 |
Other assets | 1.2 |  | — |  | $ | 1.2 |
Total assets acquired | 42.0 |  | 0.4 |  | 42.4 |
Accounts payable | (4.0 | ) | — |  | (4.0 | )
Capital lease obligations | (1.7 | ) | — |  | (1.7 | )
Long-term deferred tax liability | (5.4 | ) | (0.4 | ) | (5.8 | )
Other liabilities | (1.0 | ) | — |  | (1.0 | )
Total liabilities assumed | (12.1 | ) | (0.4 | ) | (12.5 | )
Total identifiable net assets | $ | 29.9 |  | $ | — |  | $ | 29.9 |
Goodwill | $ | 22.3 |  | $ | — |  | $ | 22.3 |
(2) The measurement adjustments were primarily due to refinement to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments resulted in no net impact to Goodwill. The measurement adjustments recorded in 2019 did not have a significant impact on our consolidated statements of income for the twelve months ended October 31, 2019. The Company recognized goodwill related to this acquisition of $22.3 million. The goodwill recognized in this acquisition is attributable to the acquired assembled workforce, economies of scale, vertical integration and new market penetration. Tholu is reported within the Rigid Industrial Packaging & Services segment to which the goodwill was assigned. The goodwill is not expected to be deductible for tax purposes. Acquired property, plant and equipment will be depreciated over its estimated remaining useful lives on a straight-line basis. Acquired intangible assets will be amortized over the estimated useful lives, primarily on a straight-line basis. The following table summarizes the preliminary purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired:
(in millions) | Preliminary Fair Value | Weighted Average Estimated Useful Life
Customer relationships | $ | 21.9 |  | 15.0
Trademarks | 1.2 |  | 9.0
Other | 1.0 |  | 2.0
Total intangible assets | $ | 24.1 |  |
The Company has not yet finalized the determination of the fair value of assets acquired and liabilities assumed, including income taxes and contingencies. The Company expects to finalize these amounts within one year of the acquisition date. The current preliminary estimate of fair value and purchase price allocation were based on information available at the time of closing the acquisition, and the Company continues to evaluate the underlying inputs and assumptions that are being used in fair value estimates. Accordingly, these preliminary estimates are subject to adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of closing the acquisition. Divestitures For the year ended October 31, 2019, the Company completed two divestitures of non-U.S. businesses in the Rigid Industrial Packaging & Services segment, liquidated two non-strategic non-U.S. business in the Rigid Industrial Packaging & Services segment, and deconsolidated one wholly-owned non-U.S. business in the Rigid Industrial Packaging & Services segment. The loss on disposal of businesses was $3.7 million for the year ended October 31, 2019. Proceeds from divestitures were $1.5 million for the year ended October 31, 2019. Proceeds from divestitures that were completed in 2015 and collected during the year ended October 31, 2019 were $0.8 million. Proceeds from divestitures that were completed in 2016 and collected during the year ended October 31, 2019 were $1.6 million. For the year ended October 31, 2018, the Company completed no divestitures. The Company liquidated two non-strategic non-U.S. business in the Flexible Products & Services segment. The gain on disposal of businesses was $0.8 million for the year ended October 31, 2018. Proceeds from divestitures that were completed in 2017 and collected during the year ended October 31, 2018 were $0.5 million. Proceeds from divestitures that were completed in 2015 and collected during the year ended October 31, 2018 were $0.9 million. The Company had $2.9 million of notes receivable recorded from the sale of businesses for the year ended October 31, 2018. For the year ended October 31, 2017, the Company completed two divestitures in the Rigid Industrial Packaging & Services segment, deconsolidated one nonstrategic business in the Flexible Products & Services segment and one nonstrategic business in the Rigid Industrial Packaging & Services segment, and liquidated two non-U.S. nonstrategic businesses in the Rigid Industrial Packaging & Services segment. The loss on disposal of businesses was $1.7 million for the year ended October 31, 2017. Proceeds from divestitures were $5.1 million for the year ended October 31, 2017. Proceeds from divestitures that were completed in fiscal year 2015 and collected during the year ended October 31, 2017 were $0.8 million. The Company had $4.3 million of notes receivable recorded from the sale of businesses for the year ended October 31, 2017. None of the above-referenced divestitures in 2019, 2018, or 2017 qualified as discontinued operations as they do not, individually or in the aggregate, represent a strategic shift that has had a major impact on the Company's operations or financial results.

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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 http://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 http://asc.fasb.org/topic&trid=2303972 + Details
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