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ACQUISITIONS AND DIVESTITURES | 6 Months Ended
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Apr. 30, 2020
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 The Company completed its acquisition of Caraustar Industries, Inc. and its subsidiaries (“Caraustar”) on February 11, 2019 (the “Caraustar Acquisition”). Caraustar is 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 following table summarizes the consideration transferred to acquire Caraustar and the final valuation of identifiable assets acquired and liabilities assumed at the acquisition date, as well as measurement period adjustments made since the acquisition in 2019 through the close of measurement period:
(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 |  | (4.4) |  | 99.5 |
Prepaid and other current assets | 21.5 |  | (9.3) |  | 12.2 |
Intangibles | 717.1 |  | 8.4 |  | 725.5 |
Other long-term assets | 1.3 |  | 4.3 |  | 5.6 |
Properties, plants and equipment | 521.3 |  | (17.6) |  | 503.7 |
Total assets acquired | 1,512.1 |  | (18.6) |  | 1,493.5 |
Accounts payable | (99.5) |  | — |  | (99.5) |
Accrued payroll and employee benefits | (42.9) |  | (7.2) |  | (50.1) |
Other current liabilities | (21.8) |  | 4.5 |  | (17.3) |
Long-term deferred tax liability | (185.7) |  | 52.0 |  | (133.7) |
Pension and postretirement obligations | (67.1) |  | — |  | (67.1) |
Other long-term liabilities | (12.7) |  | (7.5) |  | (20.2) |
Total liabilities assumed | (429.7) |  | 41.8 |  | (387.9) |
Total identifiable net assets | $ | 1,082.4 |  | $ | 23.2 |  | $ | 1,105.6 |
Goodwill | $ | 752.5 |  | $ | (23.2) |  | $ | 729.3 |
(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 $23.2 million decrease to goodwill. The measurement adjustments recorded did not have a significant impact on the Company's interim condensed consolidated statements of income for the three and six months ended April 30, 2020. The Company recognized goodwill related to this acquisition of $729.3 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 are being 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 are being amortized over the estimated useful lives, primarily on a straight-line basis. The following table summarizes the final purchase price allocation and weighted average remaining useful lives for identifiable intangible assets acquired:
(in millions) | Final 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 |  |
As of April 30, 2020, the Company had completed the determination of the fair value of assets acquired and liabilities assumed related to the Caraustar Acquisition. The Company continues to execute on synergies and location rationalization, including the closure of our Mobile, Alabama Mill announced in June 3, 2020. Divestiture s During the second quarter of 2020, the Company completed its divestiture of a U.S. business in the Paper Packaging & Services segment, the Consumer Packaging Group ("CPG") business, for $85.0 million, before preliminary adjustments at closing of $3.4 million and subject to final adjustments, for current net cash proceeds of $81.6 million. The loss on sale of business, net for the three and six months ended April 30, 2020 was $38.4 million, including goodwill allocated to the sale of $35.6 million. The CPG business divestiture did not qualify as discontinued operations as it did not 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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