Business Combinations and Divestitures

12 Months Ended

Sep. 30, 2023

Business Combinations

Billie Inc.

On November 29, 2021, the Company completed the Billie Acquisition for cash consideration of $309.4, net of cash acquired. As a result of the Acquisition, Billie became a wholly owned subsidiary of the Company. The Company accounted for the Acquisition utilizing the acquisition method of accounting, which requires assets and liabilities to be recognized based on estimates of their acquisition date fair values. The determination of the values of the acquired assets and assumed liabilities, including goodwill, other intangible assets and deferred taxes, requires significant judgement. The Company has calculated fair values of the assets and liabilities acquired from Billie, including goodwill, intangible assets and working capital. The Company completed the final fair value determination of the Acquisition in the fourth quarter of fiscal year 2022.

The Company used variations of the income approach in determining the fair value of intangible assets acquired in the Billie Acquisition. Specifically, we utilized the multi-period excess earnings method to determine the fair value of the definite lived customer relationships acquired and the relief from royalty method to determine the fair value of the definite lived trade name acquired. Our determination of the fair value of the intangible assets acquired involved the use of significant estimates and assumptions related to revenue growth rates, discount rates, customer attrition rates, and royalty rates. Edgewell believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.

The following table provides the allocation of the purchase price related to the Billie Acquisition based upon the fair value of assets and liabilities assumed:


Current assets	$	17.0
Goodwill	181.2
Intangible assets	136.0
Other assets, including property, plant and equipment, net	3.2
Current liabilities	(6.9)
Deferred tax liabilities	(21.1)
	$	309.4

The acquired goodwill represented the value of expansion into new markets and channels of trade and is not deductible for tax purposes. The intangible assets acquired consisted primarily of the Billie trade name and customer relationships with a weighted average useful life of 19 years. All assets are included in the Company’s Wet Shave segment.

Billie contributed net sales and a loss before income taxes totaling $93.7 and $1.1, respectively, for the post-acquisition period ending September 30, 2022 in the Consolidated Statements of Earnings and Comprehensive Income. The loss before income taxes was driven primarily by amortization expense of acquired intangible assets. Acquisition and integration costs related to Billie totaling $7.5 and nil were included in SG&A and Cost of products sold in the Consolidated Statements of Earnings and Comprehensive Income, respectively, for fiscal 2023. Acquisition and integration costs related to Billie totaling $9.1 and $0.8 were included in SG&A and Cost of products sold in the Consolidated Statements of Earnings and Comprehensive Income, respectively, for fiscal 2022.

The following summarizes the Company's unaudited pro forma consolidated results of operations for the twelve months ended September 30, 2022 and September 30, 2021, as though the Billie Acquisition occurred on October 1, 2020. The twelve months ended September 30, 2022 and 2021 include results of Billie over the full periods presented.


	Twelve Months Ended September 30,
		2022		2021
Pro forma net sales		$	2,181.7	$	2,155.3
Pro forma net earnings		104.9		93.1

The unaudited pro forma consolidated results of operations were adjusted by pre-tax amortization expense of $1.3 and $8.9 for the years ended September 30, 2022 and 2021, respectively. Additionally, pro forma earnings for the twelve months ended September 30, 2022 exclude $9.9 of pre-tax acquisition costs, which were included in the pro forma earnings for the twelve months ended September 30, 2021. The pro forma earnings were also adjusted to reflect the capital structure as of the Acquisition Date, and all pro forma adjustments have been included with related tax effects. The unaudited pro forma consolidated results of operations are not necessarily indicative of the results obtained had the Billie Acquisition occurred on October 1, 2020, or of those results that may be obtained in the future. Amounts do not reflect any anticipated cost savings or cross-selling opportunities expected to result from the Billie Acquisition.

Cremo Holding Company, LLC

On September 2, 2020, the Company completed the acquisition of Cremo Holding Company, LLC (the “Cremo Acquisition”). The Company accounted for the Cremo Acquisition utilizing the acquisition method of accounting, which requires assets and liabilities to be recognized based on estimates of their acquisition date fair values. The determination of the values of the acquired assets and assumed liabilities, including goodwill and other intangible assets, requires significant judgment. We have calculated fair values of the assets and liabilities acquired from Cremo including goodwill and intangible assets and working capital. The Company completed the final fair value determination of the Cremo Acquisition in the first quarter of fiscal year 2021.

The Company used variations of the income approach in determining the fair value of intangible assets acquired in the Cremo Acquisition. Specifically, we utilized the multi-period excess earnings method to determine the fair value of the definite lived customer relationships acquired and the relief from royalty method to determine the fair value of the definite lived trade name and proprietary technology acquired. Our determination of the fair value of the intangible assets acquired involved the use of significant estimates and assumptions related to revenue growth rates, discount rates, customer attrition rates, and royalty rates. The Company believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.

The following table provides the allocation of the purchase price related to the Cremo Acquisition based upon the fair value of assets and liabilities assumed:


Working capital and other net assets (including cash of $0.7)	$	11.5
Intangible assets	95.1
Goodwill	128.0
Net Assets acquired	$	234.6

The acquired goodwill represented the value of expansion into new markets and channels of trade and is deductible for tax purposes. The intangible assets acquired consisted primarily of the Cremo trade name, customer relationships, and product formulations with a weighted-average useful life of 17 years. All assets are included in the Company’s Sun and Skin Care segment.

The Company noted that the net sales and net earnings of Cremo from the beginning of fiscal 2020 through the date of the closing of the Cremo Acquisition were not material relative to the total net sales and net earnings of the Company during fiscal 2020, and thus pro-forma results for Cremo were not disclosed in accordance with Accounting Standards Codification 805. Acquisition and integration costs related to Cremo totaling $7.1 for the year ended September 30, 2021 were included in SG&A in the Consolidated Statements of Earnings and Comprehensive Income. Additionally, acquisition costs of $1.3 were included in Cost of products sold for the year ended September 30, 2021.