Note 2 — BUSINESS COMBINATIONS

Accella Performance Materials

On December 1, 2014, the Company completed the acquisition of specialty assets of Accella Performance Materials (Accella), a leading North American manufacturer of liquid polymer formulations, for approximately $47.2 million in cash, net of cash acquired. The results of operations of Accella were included in the Company’s Consolidated Statements of Income for the period subsequent to the date of the acquisition and are reported in the Global Color, Additives and Inks segment. The acquisition resulted in preliminary goodwill and intangible assets of $40.5 million. Goodwill recognized as a result of this acquisition is deductible for tax purposes. As of December 31, 2014, the entire purchase price allocation is preliminary.

Spartech Corporation

On March 13, 2013, PolyOne acquired Spartech Corporation (Spartech), a supplier of sustainable plastic sheet, color and engineered materials, and packaging solutions, based in Clayton, Missouri, with fiscal 2012 sales of $1,149.4 million and net income from continuing operations of $2.7 million.

At the effective time of the merger, each issued and outstanding share of Spartech common shares was canceled and converted into the right to receive consideration equal to $2.67 in cash and 0.3167 shares of PolyOne common shares. PolyOne paid $83.4 million in cash and issued approximately 10.0 million shares of its common shares to Spartech's stockholders. PolyOne funded the cash portion of the consideration, and the repayment of certain portions of Spartech's debt, with a portion of the net proceeds of its issuance of 5.25% senior notes due 2023, discussed in Note 6, Financing Arrangements.

The acquisition of Spartech has provided substantial synergies through enhanced operational cost efficiencies and has expanded PolyOne's specialty portfolio. By combining Spartech's leading market positions in sheet, rigid barrier packaging and specialty cast acrylics with PolyOne's capabilities, we have been better able serve our customers and accelerate growth.

Spartech's results have been reflected within our Consolidated Statements of Income and within the Designed Structures and Solutions segment, as well as our existing Global Specialty Engineered Materials, Global Color, Additives and Inks and Performance Products and Solutions segments since the date of acquisition.

Based on the closing price of PolyOne's common stock on March 13, 2013, the purchase price was comprised of the following:



(In millions, except stock price and share data)
Spartech shares outstanding	31.2
Spartech restricted stock units	0.2
Spartech shares converted	31.4
Exchange ratio	0.3167
PolyOne shares issued	10.0
PolyOne closing stock price on March 13, 2013	$	25.05
Total value of PolyOne shares issued	$	249.9
Cash consideration transferred to Spartech shareholders	83.4
Fair value of Spartech equity awards, net of deferred tax benefits ⁽¹⁾	2.4
Total consideration transferred to Spartech equity holders	335.7
Spartech revolving credit facilities repaid at close ⁽²⁾	77.2
Spartech senior notes repaid at close ⁽²⁾	102.3
Total consideration transferred to debt and equity holders	515.2
Cash acquired	(4.1		)
Total consideration transferred to debt and equity holders, net of cash acquired	$	511.1

(1) In accordance with ASC 718, Compensation — Stock Compensation, the fair value of replacement awards attributable to pre-combination service is recognized as part of purchase consideration. The $2.4 million represents the fair value of Spartech replacement equity awards of $3.9 million net of deferred income tax benefits of $1.5 million. The fair value of awards attributable to post-combination service amounted to $2.7 million and are being recognized as stock compensation over their requisite service periods within PolyOne's Consolidated Statements of Income.

(2) In accordance with the provisions of Spartech's 7.08% senior notes due 2016 and revolving credit facilities, at the time of closing, PolyOne repaid all borrowings under Spartech's revolving credit facilities, which amounted to $77.2 million. Additionally, PolyOne repaid $102.3 million related to Spartech's 7.08% senior notes due 2016, including $88.9 million of aggregated principal, $10.3 million make-whole provisions, and $3.1 million of interest payable.

The acquisition of Spartech has been accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. The purchase price allocation was finalized in the first quarter of 2014, following the completion of our assessment of contingencies and income taxes, which resulted in an increase to goodwill of $9.4 million. The 2013 consolidated financial statements have not been retroactively adjusted as these measurement period adjustments did not have a material impact on such statements.

The following table summarizes PolyOne's final fair value estimates at the acquisition date:



(In millions)	Final allocation
Accounts receivable	$	139.7
Inventories	114.4
Other current assets	18.6
Property	280.3
Other non-current assets	19.6
Intangible assets	44.6
Goodwill	162.6
Total assets acquired	779.8
Short-term and current portion of long-term debt	0.5
Accounts payable	105.0
Accrued expenses and other liabilities	43.1
Long-term debt	11.0
Other non-current liabilities	109.1
Total liabilities assumed	268.7
Net assets acquired	$	511.1

Goodwill is calculated as the excess of the consideration transferred over the assets acquired, and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill has been allocated to the Designed Structures and Solutions, Global Color, Additives and Inks and Performance Products and Solutions segments. Goodwill recognized as a result of this acquisition is not deductible for tax purposes. See Note 3, Goodwill and Intangible Assets, for information about goodwill and intangible assets.

The following unaudited pro forma information of PolyOne for the years ended December 31, 2013 and 2012 includes Spartech's operating results for the respective periods, as if the acquisition and related financing occurred on January 1, 2012. The following pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction occurred on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.



	Year Ended December 31,
(In millions)	Pro Forma 2013		Pro Forma 2012
Sales	$	3,989.2	$	4,006.9
Net income from continuing operations	$	94.7	$	56.5

The unaudited pro forma financial information presented in the table above has been adjusted to give effect to adjustments that are: (1) directly related to the business combination; (2) factually supportable; and (3) expected to have a continuing impact. These adjustments include, but are not limited to, depreciation and amortization related to fair value adjustments to property, plant and equipment and intangible assets, and interest expense on acquisition-related debt.

In 2013, we incurred acquisition-related costs totaling of $7.6 million which have been included within selling and administrative expense in our Consolidated Statements of Income.

Glasforms

On December 19, 2012, PolyOne acquired all of the outstanding equity of Glasforms Inc. (Glasforms), a leading manufacturer of glass and carbon fiber reinforced polymers and advanced composite products, with 2012 annual sales of $51.1 million. The purchase marks PolyOne's entry into advanced composite technology, an adjacency consistent with the Company's strategy of providing specialty solutions that deliver high value to customers. The acquisition date fair value of the consideration transferred was $34.3 million, net of cash acquired of $1.2 million. Glasforms results have been reflected within our Consolidated Statement of Income and within our Global Specialty Engineered Materials Segment since the date of acquisition. The acquisition resulted in goodwill of $12.4 million and $10.7 million of identifiable intangible assets.

In 2012, we incurred acquisition-related costs totaling of $3.9 million which have been included within Selling and administrative expense in our Consolidated Statement of Income.