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Business Combinations
 9 Months Ended
Sep. 30, 2015
Business Combinations  
Business Combinations

15.  Business Combinations

 

On September 1, 2015, the Company completed the Vitro Acquisition for approximately $2.15 billion in cash, subject to a working capital adjustment and certain other adjustments.  The Vitro Business in Mexico is the largest supplier of glass containers in that country manufacturing glass containers across multiple end uses, including food, soft drinks, beer, wine and spirits. The Vitro Acquisition included five food and beverage glass container plants in Mexico, a plant in Bolivia and a North American distribution business, and provided the Company with a competitive position in the glass packaging market in Mexico.  The results of the Vitro Business have been included in the Company’s consolidated financial statements since September 1, 2015.  Vitro’s food and beverage glass container operations in Mexico and Bolivia are included in the Latin American operating segment while its distribution business is included in the North American operating segment.

 

The Company financed the Vitro Acquisition with the proceeds from its recently completed senior notes offering, cash on hand and the incremental term loan facilities (see Note 8).

 

The total purchase price will be allocated to the tangible and identifiable intangible assets and liabilities based upon their respective fair values.  The purchase agreement contains customary provisions for working capital adjustments, which the Company expects to resolve with the seller in the fourth quarter of 2015.  The purchase price allocation has not been finalized as of September 30, 2015, because the Company has not yet completed its review of the asset and liability values and related amortization and depreciation periods.  The following table summarizes the preliminary estimates of fair value of the assets and liabilities assumed on September 1, 2015:

 

 

 

 

 

 

Cash

    

$
17

 

Other current assets

 

 
344

 

Goodwill

 

 
1,073

 

Intangible assets

 

 
406

 

Net property, plant and equipment

 

 
597

 

Total assets

 

 
2,437

 

 

 

 

 

 

Current liabilities

 

 
93

 

Long-term debt

 

 
11

 

Long-term liabilities

 

 
36

 

Net assets acquired

 

$
2,297

 

 

In conjunction with the Vitro acquisition, the Company remitted approximately $147 million related to value added taxes owed as a result of certain internal restructuring transactions undertaken by Vitro, S.A.B. de C.V. related to the closing of the Vitro Acquisition. This amount is included in “Other current assets” above and is expected to be refunded to the Company in approximately twelve months.

 

Recognized goodwill is attributable to the assembled workforce, expected synergies and other intangible assets that do not qualify for separate recognition. Goodwill is not deductible for tax purposes.

 

As of September 1, 2015, intangible assets subject to amortization consist of amounts recognized for the fair value as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible asset

 

 

Value

 

Amortization Period

Customer relationships

 

$
400

 

12 years

Other intangible assets

 

 
6

 

varies