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Business Combinations

12 Months Ended

Dec. 31, 2019

21. Business Combinations

On June 28, 2019, the Company completed the acquisition of Nueva Fábrica Nacional de Vidrio, S. de R.L. de C.V. (“Nueva Fanal”) from Grupo Modelo, an affiliate of Anheuser-Busch InBev SA/NV for a total purchase price of approximately $190 million, subject to a working capital adjustment. The Company financed this acquisition with debt. The Nueva Fanal facility is located near Mexico City, Mexico. Currently, this plant has three furnaces to produce and supply approximately 240,000 tons of glass containers annually for Grupo Modelo brands, such as Corona, for local and global export markets. This acquisition increases the Company’s presence in the Mexican glass packaging market.

Nueva Fanal’s operating results are included in the Company’s Consolidated Financial Statements from the acquisition date as part of the Americas segment. The acquisition qualifies as a business combination and will be accounted for using the acquisition method of accounting.

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 by the end of the second quarter of 2020. The aggregate purchase price was preliminarily allocated to the Company’s balance sheet as of December 31, 2019, and has not yet been finalized because the Company has not yet completed the valuation of the acquired property, plant and equipment and the related depreciation periods. The Company expects that the purchase price allocation process will be completed no later than the second quarter of 2020. The following table summarizes the preliminary estimates of fair value of the assets acquired and liabilities assumed on June 28, 2019 and

subsequent adjustments identified through the ongoing purchase price allocation process and recorded through the measurement period:


		June 28, 2019		Measurement Period Adjustments		December 31, 2019
Accounts receivable	$	42	$		$	42
Inventory		17				17
Goodwill		0		21		21
Intangibles		35		(32)		3
Net property, plant and equipment		129		32		161
Total assets acquired		223		21		244
Accounts payable		25		1		26
Accrued liabilities		3				3
Deferred tax liabilities		0		25		25
Net assets acquired	$	195	$	(5)	$	190

The fair value of the tangible assets was estimated utilizing income and market approaches, considering remaining useful life. The value assigned to the customer list intangibles was based on the present value of future earnings attributable to the asset group after recognition of required returns to the other contributory assets. Recognized goodwill is attributable to the assembled workforce, expected synergies and other intangible assets that do not qualify for separate recognition. The goodwill related to this acquisition is not deductible for tax purposes.

The provisional balance sheet adjustments identified above did not result in any significant adjustments to the previous period’s income statement. This acquisition did not meet the thresholds for a significant acquisition and therefore no pro forma financial information is presented.