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Acquisitions | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Acquisitions | 3. Acquisitions Acquisition of Foroni Effective August 1, 2019, we completed the acquisition of Foroni, a leading provider of Foroni® branded notebooks and paper-based school and office products in Brazil. The Foroni Acquisition advances our strategy to expand in faster growing geographies and product categories, add consumer-centric brands and diversify our customer base. The results of Foroni are included in the ACCO Brands International segment effective August 1, 2019. The preliminary purchase price was R$159.5 million (US$42.1 million based on July 31, 2019 exchange rates) subject to working capital and other adjustments. We also assumed $7.6 million in debt. A portion of the purchase price (R$25.0 million or US$6.6 million based on July 31, 2019 exchange rates) is being held in an escrow account for a period of up to 6 years after closing in the event of any claims against the sellers under the quota purchase agreement. The Company may also make claims against the sellers directly, subject to limitations in the quota purchase agreement, if the escrow is depleted. The Foroni Acquisition and related expenses were funded by cash on hand. For accounting purposes, the Company was the acquiring enterprise. The Foroni Acquisition is being accounted for as a purchase business combination and Foroni's results are included in the Company’s condensed consolidated financial statements as of August 1, 2019. The net sales for Foroni were $30.5 million for the five months owned during the year ended December 31, 2019. The following table presents the preliminary allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of the Foroni acquisition:
(in millions) | At August 1, 2019
Calculation of Goodwill: |
Purchase price, net of working capital adjustment | $ | 42.1 |
Plus fair value of liabilities assumed: |
Accounts payable and accrued liabilities | 12.4 |
Deferred tax liabilities | 4.0 |
Debt | 7.6 |
Lease liabilities | 5.6 |
Fair value of liabilities assumed | $ | 29.6 |
Less fair value of assets acquired: |
Cash acquired | — |
Accounts receivable | 17.5 |
Inventory | 12.3 |
Property and equipment | 9.1 |
Identifiable intangibles | 11.1 |
Deferred tax assets | 2.7 |
Right of use asset, leases | 5.6 |
Other assets | 3.6 |
Fair value of assets acquired | $ | 61.9 |
Goodwill | $ | 9.8 |
We are continuing our review of our fair value estimate of assets acquired and liabilities assumed during the measurement period, which will conclude as soon as we receive the information we are seeking about facts and circumstances that existed as of the acquisition date or learn that more information is not available. This measurement period will not exceed one year from the acquisition date. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The preliminary goodwill of $9.8 million is primarily attributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from the existence of an assembled workforce. Our fair value estimate of assets acquired and liabilities assumed is pending the completion of several elements, including the final determination of the purchase price, pending calculations of working capital and other adjustments, of the fair value of the assets acquired and liabilities assumed and the final review by our management. The primary areas that are not yet finalized relate to intangible assets, property and equipment, reserves and liabilities, and income and other taxes. Accordingly, there could be material adjustments to our condensed consolidated financial statements, including changes in our amortization and depreciation expense related to the valuation of intangible assets and property and equipment acquired and their respective useful lives, among other adjustments. The final determination of the purchase price, fair values and resulting goodwill may differ significantly from what is reflected in these condensed consolidated financial statements. During the twelve months ended December 31, 2019, transaction costs related to the Foroni Acquisition were $1.5 million. These costs were reported as selling, general and administrative ("SG&A") expenses in the Company's Consolidated Statements of Income. Pro forma financial information is not presented because it is not material. Cumberland Asset Acquisition On January 31, 2019, the Company completed the purchase of certain assets, including inventory and certain identifiable intangibles, for the Cumberland brand (the "Cumberland Asset Acquisition") in Australia for a purchase price of A$8.2 million (US$6.0 million based on January 31, 2019 exchange rates). The Cumberland Asset Acquisition extends our presence in Australia into new product categories. The Company accounted for the transaction as an asset acquisition, as the set of assets acquired does not meet the criteria to be classified as a business under GAAP. During the twelve months ended December 31, 2019, transaction costs related to the Cumberland Asset Acquisition were US$0.1 million. These costs were reported as SG&A expenses in the Company's Consolidated Statements of Income. The following table summarizes the fair value of assets acquired:
(in millions) | At January 31, 2019
Inventory | $ | 2.8 |
Identifiable intangibles | 3.2 |
Fair value of assets acquired | $ | 6.0 |
Acquisition of GOBA On July 2, 2018, the Company completed the GOBA Acquisition. GOBA is a leading provider of Barrilito® branded school and craft products in Mexico. The acquisition increased the breadth and depth of our distribution throughout Mexico, especially with wholesalers and retailers and added a strong offering of school and craft products to our product portfolio in Mexico. The purchase price paid at closing was Mex$796.8 million (US$39.9 million based on July 2, 2018 exchange rates), and was later reduced by US$0.8 million of working capital adjustments. The purchase price, net of cash acquired of $1.9 million, was $37.2 million. A portion of the purchase price (Mex$115.0 million (US$5.8 million based on July 2, 2018 exchange rates)) is being held in an escrow account for a period of up to 5 years after closing in the event of any claims against the sellers under the stock purchase agreement. The Company may also make claims against the sellers directly, subject to limitations in the stock purchase agreement, if the escrow is depleted. The GOBA Acquisition and related expenses were funded by increased borrowing under our revolving facility. For accounting purposes, the Company was the acquiring enterprise. The GOBA Acquisition was accounted for as a purchase business combination. The results of GOBA are included in the ACCO Brands International segment as of July 2, 2018. The net sales for GOBA for the six-month period ended June 30, 2019 were $23.7 million. The following table presents the allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of the GOBA Acquisition:
(in millions) | At July 2, 2018
Calculation of Goodwill: |
Purchase price, net of working capital adjustment | $ | 39.1 |
Plus fair value of liabilities assumed: |
Accounts payable and accrued liabilities | 10.1 |
Deferred tax liabilities | 3.1 |
Other non-current liabilities | 6.5 |
Fair value of liabilities assumed | $ | 19.7 |
Less fair value of assets acquired: |
Cash acquired | 1.9 |
Accounts receivable | 30.0 |
Inventory | 7.1 |
Property and equipment | 0.6 |
Identifiable intangibles | 10.3 |
Deferred tax assets | 2.0 |
Other assets | 4.2 |
Fair value of assets acquired | $ | 56.1 |
Goodwill | $ | 2.7 |
In the second quarter of 2019 we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date. For the year ended December 31, 2018, transaction costs related to the GOBA Acquisition were US$1.1 million. These costs were reported as interest and SG&A expenses in the Company's Consolidated Statements of Income. Acquisition of Esselte Group Holdings AB On January 31, 2017, ACCO Europe Limited ("ACCO Europe"), an indirect wholly-owned subsidiary of the Company, completed the Esselte Acquisition. The Esselte Acquisition was made pursuant to the share purchase agreement, dated October 21, 2016, as amended (the "Purchase Agreement"), among ACCO Europe, the Company and an entity controlled by J. W. Childs (the "Seller"). As a result of the acquisition of Esselte, ACCO Brands became a leading European manufacturer and marketer of branded consumer and office products. The Esselte acquisition added the Leitz®, Rapid® and Esselte® brands in the storage and organization, stapling, punching, business machines and do-it-yourself tools product categories to the Company's portfolio. The combination improved ACCO Brands’ scale and enhanced its position as an industry leader in Europe. The purchase price paid at closing was €302.9 million (US$326.8 million based on January 31, 2017 exchange rates) and was subject to a working capital adjustment that reduced it by $0.3 million. The purchase price, net of cash acquired of $34.2 million, was $292.3 million. A warranty and indemnity insurance policy held by the Company and ACCO Europe insures certain of Seller’s contractual obligations to ACCO Europe under the Purchase Agreement for up to €40.0 million (US$43.2 million based on January 31, 2017 exchange rates) for a period of up to seven years, subject to certain deductibles and limitations set forth in the policy. The Esselte Acquisition and related expenses were funded through a term loan of €300.0 million (US$320.8 million based on January 27, 2017 exchange rates) and cash on hand. For accounting purposes, the Company was the acquiring enterprise. The Esselte Acquisition was accounted for as a purchase business combination and Esselte's results are included in the Company’s consolidated financial statements as of February 1, 2017. The following table presents the allocation of the consideration given to the fair values of the assets acquired and liabilities assumed at the date of the Esselte Acquisition:
(in millions) | At January 31, 2017
Calculation of Goodwill: |
Purchase price, net of working capital adjustment | $ | 326.5 |
Plus fair value of liabilities assumed: |
Accounts payable and accrued liabilities | 121.9 |
Deferred tax liabilities | 83.6 |
Pension obligations | 174.1 |
Other non-current liabilities | 5.8 |
Fair value of liabilities assumed | $ | 385.4 |
Less fair value of assets acquired: |
Cash acquired | 34.2 |
Accounts receivable | 60.0 |
Inventory | 41.9 |
Property, plant and equipment | 75.6 |
Identifiable intangibles | 277.0 |
Deferred tax assets | 106.3 |
Other assets | 10.4 |
Fair value of assets acquired | $ | 605.4 |
Goodwill | $ | 106.5 |
In the fourth quarter of 2017 we finalized our fair value estimate of assets acquired and liabilities assumed as of the acquisition date. The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill. The goodwill of $106.5 million is primarily attributable to synergies expected to be realized from facility integration, headcount reduction and other operational streamlining activities, and from the existence of an assembled workforce. For the year ended December 31, 2017, transaction costs related to the Esselte Acquisition were $5.0 million. These costs were reported as SG&A expenses in the Company's Consolidated Statements of Income.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: 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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