ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS

2017 Acquisition Activity

On May 12, 2017, we acquired Souq Group Ltd. (“Souq”), an e-commerce company, for approximately $586 million, net of cash acquired, to expand our retail presence. During the six months ended June 30, 2017, we also acquired certain other companies for an aggregate purchase price of $86 million. The primary reason for our other 2017 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively.

Acquisition-related costs were expensed as incurred and were not significant. Due to the limited amount of time since the acquisition of Souq, the valuation of certain assets and liabilities is preliminary and subject to change. The aggregate purchase price of these acquisitions was allocated as follows (in millions):



Purchase Price
Cash paid, net of cash acquired	$	586
Indemnification holdback	86
	$	672
Allocation
Goodwill	$	425
Intangible assets (1):
Marketing-related	62
Contract-based	32
Technology-based	108
Customer-related	48
	250
Property and equipment	14
Deferred tax assets	15
Other assets acquired	134
Deferred tax liabilities	(18		)
Other liabilities assumed	(148		)
	$	672

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(1)	Acquired intangible assets have estimated useful lives of between one and seven years, with a weighted-average amortization period of four years.

We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income approach. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line basis over their estimated useful lives.

Pro Forma Financial Information (unaudited)

The acquired companies were consolidated into our financial statements starting on their respective acquisition dates. The aggregate net sales and operating loss of the companies acquired was $77 million and $26 million for the six months ended June 30, 2017. The following financial information, which excludes certain acquired companies for which the pro forma impact is not meaningful, presents our results as if the acquisitions during the six months ended June 30, 2017 had occurred on January 1, 2016 (in millions):



	Six Months Ended June 30,
	2016		2017
Net sales	$	59,762	$	73,855
Net income	$	1,321	$	873

Goodwill

The goodwill of the acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition. The goodwill of acquired companies is generally not deductible for tax purposes. The following summarizes our goodwill activity in the first six months of 2017 by segment (in millions):



	North America		International		AWS		Consolidated
Goodwill - December 31, 2016	$	2,044	$	694	$	1,046	$	3,784
New acquisitions	80		327		18		425
Other adjustments (1)	4		28		13		45
Goodwill - June 30, 2017	$	2,128	$	1,049	$	1,077	$	4,254

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(1)	Primarily includes changes in foreign exchange rates.