Acquisition

3 Months Ended

Mar. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition of Itasa

On April 6, 2021, the Company completed the acquisition (the “Acquisition”) of all of the outstanding capital stock of Global Release Liners, S.L., a Spanish limited company (“Itasa”), from Magnum Capital and other minority shareholders for $240.2 million in cash, net of cash on hand and debt extinguishment, and including a loss on foreign currency forward contracts. Itasa, through its subsidiaries, is a leading global coater and converter of release liners used in hygiene, tapes, industrial, labels, composites and various other end markets. The Acquisition was funded with available cash-on-hand and the net proceeds of the Term Loan B discussed in Note 5, "Debt." In 2021, the Company incurred $12.8 million of costs related to the Acquisition, including a realized loss of $5.1 million related to the foreign currency forward contracts negotiated to fund the purchase price in euros. See Note 1, "Background and Basis of Presentation," for further discussion on these contracts. The Itasa business is part of the Company's Technical Products segment.

The Company accounted for the transaction using the acquisition method in accordance with ASC Topic 805, Business Combinations ("ASC Topic 805"). The following table summarizes the final allocation of the purchase price to the fair value of the assets acquired and liabilities assumed as of April 6, 2021:


Assets Acquired
Cash and cash equivalents	$	34.0
Accounts receivable	20.7
Inventories	24.6
Prepaid and other current assets	2.1
Property, plant and equipment	19.8
Finance lease Right-of-Use assets	22.1
Operating lease Right-of-Use assets	0.1

Non-amortizable intangible assets	4.1
Amortizable intangible assets	100.5
Other assets	0.3
Goodwill	119.5
Total assets acquired	347.8

Liabilities Assumed
Accounts payable	22.3
Accrued expenses	6.5
Long-term debt	26.4
Lease liabilities - Finance	22.1
Lease liabilities - Operating	0.1
Deferred income taxes	27.5
Other noncurrent obligations	0.3
Total liabilities assumed	105.2

Net assets acquired	$	242.6

The Company estimated the fair value of the assets and liabilities acquired in accordance with ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The fair value of amortizable and non-amortizable intangible assets was determined by applying a royalty rate to projected revenue, net of tax impacts and adjusted for present value considerations. The Company determined the fair value of acquired property, plant and equipment using a combination of cost and market approaches. In general, the fair value of other acquired assets and liabilities was determined using the cost basis of Itasa. There were no material changes to the final purchase price allocation during the three months ended March 31, 2022.

The excess of the purchase price over the fair value of the tangible net assets and identifiable intangible assets acquired was recorded as goodwill. The factors contributing to the amount of goodwill recognized are based on several strategic and synergistic benefits that are expected to be realized from the acquisition of Itasa. These benefits include entry into profitable new markets for silicone release liners with new capabilities and recognized brands and synergies from combining the business with Neenah's existing infrastructure. None of the goodwill recognized as part of the Itasa acquisition will be deductible for income tax purposes. All of the acquired goodwill was allocated to the Technical Products segment.