Business Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition of a Business

On July 1, 2022, EVERTEC's main operating subsidiary, EVERTEC Group closed on the acquisition of 100% of the share capital of BBR SpA (“BBR”), a payment solutions and business technology company with operations in Chile and Peru, by entering into a share purchase agreement (Contrato de Compraventa de Acciones). As consideration for the purchase, the Company transferred to the sellers upon closing cash that amounted to $45.9 million and certificates of deposits that amounted to $7.3 million. The BBR acquisition increases the Company’s payment solution offerings, provides access to larger merchants in Chile and expands the Company’s physical presence into Peru.

The Company accounted for this transaction as a business combination. The following table details the fair value of assets acquired and liabilities assumed from the BBR acquisition:


	Assets/Liabilities (at fair value)
( In thousands)
Cash and cash equivalents	$	1,551
Accounts receivable, net	2,969

Property and equipment, net	3
Operating lease right-of-use asset	76
Goodwill	33,247
Other intangible assets, net	24,850
Deferred tax asset	267
Total assets acquired	62,963
Accounts payable	1,039
Contract liability	1,136
Operating lease liability	85
Deferred tax liability	7,614
Total liabilities assumed	$	9,874

The following table details the major groups of intangible assets acquired and the weighted average amortization period for these assets:


	Amount		Weighted-average life
(Dollar amounts in thousands)

Customer relationships	$	22,500	15
Trademark	1,250		5
Software packages	1,100		5
Total	$	24,850	14

Refer to Note 11 Goodwill and Other Intangible Assets for detail of goodwill allocated by reportable segments. The goodwill is primarily attributed to synergies. None of the goodwill is deductible for income tax purposes.

Revenues and earnings from the BBR acquisition were not material for year ended December 31, 2022. Pro forma results of operations have not been presented because the effect of this business combination is not material to the consolidated financial condition and results of operations.

Sale of a Business

On July 1, 2022, the Company closed on a definitive agreement with Banco Popular de Puerto Rico and its parent, Popular, to sell software and prepaid assets and transfer certain employees in connection with those assets (the “Business”). As consideration for the sale of the Business, Popular delivered 4.6 million shares of Evertec common stock held by Popular with a value of $169.2 million at close (the “Popular Transaction”). Additionally, management concluded that $15.4 million included in the Company’s contract liability should be treated as consideration for the sale. Total consideration for the sale of the Business amounted to $184.7 million.

The Company also modified and extended the main commercial agreements with Popular, including a 10-year extension of the Merchant Acquiring Independent Sales Organization Agreement, a 5-year extension of the ATH Network Participation Agreement and a 3-year extension of the MSA. The Company also entered into new contracts and transition services agreements concurrently with the close of the Popular Transaction with terms between 3 months and 36 months.

The MSA modifications, among other things, includes the elimination of the exclusivity requirement which was the basis for a non-compete intangible asset recorded in 2010 as part of the original MSA that was being amortized over a 15 year period. As a result, the Company determined that the balance of the non-compete intangible asset on July 1, 2022 of $12.3 million, should be

written off as a component of the gain on sale of a business. The Company also concluded that certain provisions in the new contracts and transition services agreements with Popular were not at fair value, therefore requiring that a portion of the gain be allocated to these contracts based on relative stand-alone selling price which were determined from the Company's historical cost-plus margin arrangements. The Company recorded a contract liability based on relative fair value of $11.7 million in connection with this conclusion.

The following table details the consideration for the sale of the business, major classes of assets and liabilities included in the business sale and the gain on sale of a business:


	July 1, 2022
(In thousands)

Common stock received in exchange for the sale of a business	$	169,249
Contract liability representing consideration for the sale of a business	15,426
Total consideration for the sale of a business	184,675
Goodwill	(5,813)
Other intangible assets, net	(31,011)
Prepaid expenses and other assets	(497)
Contract liability	(11,712)
Gain on sale of a business	$	135,642