(4) Acquisitions

Spectrum Brands Merger

As previously disclosed, on February 24, 2018, the Company entered into the Merger Agreement with Spectrum Brands, Merger Sub 1 and Merger Sub 2.

The Merger Agreement provides that, subject to the terms and conditions thereof, Merger Sub 1 will merge with and into Spectrum Brands (the “First Merger”, and if the Second Merger Opt-Out Condition has occurred, the “Merger”), with Spectrum Brands continuing as the surviving corporation (the “Surviving Corporation”) and a wholly owned subsidiary of HRG. Following the effective time of the First Merger (the “Effective Time”) but only if HRG or Spectrum Brands (or both) do not receive and provide to the other, on the closing date but prior to the Effective Time, a tax opinion to the effect that, assuming the Second Merger does not occur, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code (the “Second Merger Opt-Out Condition”), the Surviving Corporation will merge with and into Merger Sub 2 (the “Second Merger”, and if the Second Merger Opt-Out Condition has not occurred, together with the First Merger, the “Merger”), with Merger Sub 2 surviving as a wholly owned subsidiary of HRG.

The consummation of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, (i) the approval of Spectrum Brands’ stockholders (including the approval of the holders of a majority of Spectrum Brands’ Common Stock not held by HRG, its affiliates and the executive officers of Spectrum Brands, and the approval required under Section 12 of Spectrum Brands’ certificate of incorporation in connection with a “Going-Private Transaction” (as defined therein)), (ii) the approval of HRG stockholders, (iii) the effectiveness of a registration statement on Form S-4 registering the HRG Common Stock to be issued in the Merger, (iv) the approval of the shares of HRG Common Stock to be issued in the Merger for listing on the NYSE, (v) the absence of any temporary restraining order, injunction or other judgment, order or decree issued by any governmental entity or other legal restraint or prohibition preventing the consummation of the Merger, (vi) the receipt of certain tax opinions by Spectrum Brands and/or HRG that the Merger will qualify as a reorganization under the Internal Revenue Code, (vii) the accuracy of certain representations and warranties of Spectrum Brands, Merger Sub and HRG contained in the Merger Agreement and the compliance by the parties with the covenants contained in the Merger Agreement, and (viii) other conditions specified in the Merger Agreement.

The Merger will be accounted for as an acquisition of a non-controlling interest under ASC Topic 810, Consolidation, by the Company. Spectrum Brands will obtain control of HRG, which will operate as Spectrum Brand Holdings, Inc. upon consummation of the Merger.

During the three and six months ended March 31, 2018, HRG incurred costs of $4.5 and $4.8, respectively, and Spectrum Brands incurred costs of $11.6 and $14.1, respectively, associated with the Merger. During the three and six month periods ended March 31, 2017, HRG incurred costs of $0.9 and Spectrum Brands incurred costs of $2.6 associated with the Merger. Transaction costs associated with the Merger are reported as “Selling, acquisition, operating and general expenses” in the accompanying Condensed Consolidated Statements of Operations.

Acquisition and Integration Costs

The following summarizes Spectrum Brands’ acquisition and integration costs, excluding costs associated with the Merger previously discussed, for the three and six months ended March 31, 2018 and 2017:



	Three months ended March 31,				Six months ended March 31,
	2018		2017		2018		2017
Hardware & Home Improvement Business	$	1.9	$	1.9	$	4.6	$	3.8
PetMatrix	2.1		—		3.7		—
Armored AutoGroup Parent Inc.	0.4		0.6		0.6		1.9
Other	0.1		0.8		0.8		0.9
Total acquisition and integration related charges	$	4.5	$	3.3	$	9.7	$	6.6

Acquisition and integration costs include costs directly associated with the completion of the purchase of net assets or equity interest of a business such as a business combination, equity investment, joint venture or purchase of non-controlling interest. Included costs include: transactions costs; advisory, legal, accounting, valuation, and other professional fees; and integration of acquired operations onto Spectrum Brands’ shared service platform and termination of redundant positions and locations.