Since its formation, the Company has consummated a number of transactions accounted for as business combinations as part of its growth strategy. The acquisitions of these businesses, which are in addition to periodic purchases of client contracts, have allowed the Company to increase the scale at which it operates, which in turn affords the Company the ability to increase its operating leverage, extend its network, and broaden its client base.

The accompanying consolidated financial statements include the operations of the acquired entities from their respective acquisition dates. All of the acquisitions noted below have been accounted for as a business combination. Accordingly, consideration paid by the Company to complete the acquisitions is initially allocated to the respective assets and liabilities based upon their estimated acquisition date fair values. The recorded amounts for assets acquired and liabilities assumed are provisional and subject to change during the measurement period, which is up to 12 months from the date of acquisition.

In December 2019, the Company acquired KPN International ("KPN"). The Company paid $53.6 million in cash consideration, of which $1.5 million was net cash acquired, on a debt-free basis. The results of KPN have been included from December 1, 2019. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purpose.

In October 2018, the Company acquired Access Point, Inc. ("Access Point"). The Company paid $36.3 million in cash consideration, of which $1.0 million was net cash acquired, and issued 115,194 unregistered shares of the Company's common stock valued at $4.6 million at closing. During the year ended December 31, 2019, the Company paid $0.5 million of additional cash consideration, which is included within Acquisitions of business, net of cash acquired within our consolidated statement of cash flows. The results

of Access Point have been included from October 1, 2018. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purposes.

In May 2018, the Company acquired Interoute, a Luxembourg public limited liability company. The Company paid $2,239.3 million in cash consideration at closing, of which $66.1 million was net cash acquired, and assumed $27.7 million in debt. The results of Interoute have been included from June 1, 2018. The acquisition was considered a stock purchase for tax purposes.

The Company partially funded the purchase price through the issuance of 9,589,094 shares of common stock to a group of institutional investors for proceeds of $425.0 million concurrently with the closing of the Interoute acquisition. The Company also entered into a credit agreement to fund the remainder of the purchase price. Refer to Note 9 - Debt for further information.

In February 2018, the Company also entered into a deal-contingent foreign currency hedge arrangement with a total notional amount of €1.260 billion at a spot rate of $1.23 to €1.00. Fees associated with this arrangement were payable upon closing of the acquisition based on a pre-defined schedule in the hedge agreement. The Company recognized a loss of $105.8 million upon settlement of the deal-contingent foreign currency hedge arrangement.

In March 2018, the Company acquired Accelerated Connections, Inc. ("Accelerated Connections"). The Company paid $35.0 million in cash consideration, of which $0.8 million was net cash acquired, and issued 79,930 unregistered shares of the Company's common stock valued at $4.2 million at closing. Substantially all of the consideration was allocated to goodwill and identifiable intangible assets. The results of Accelerated Connections have been included from March 1, 2018. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purposes.

In December 2017, the Company acquired Custom Connect International B.V. ("Custom Connect"). The Company paid $28.9 million in cash consideration, of which $0.6 million was net cash acquired, and issued 49,941 unregistered shares of the Company's common stock valued at $2.2 million at closing. The results of Custom Connect have been included from December 31, 2017. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purposes.

In October 2017, the Company acquired Transbeam, Inc. ("Transbeam"). The Company paid $26.4 million in cash consideration, of which $0.8 million was net cash acquired, and $2.0 million was deferred as holdback consideration for a 12-month period, subject to reduction for any indemnification claims made by the Company prior to such date. The results of Transbeam have been included from October 1, 2017. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purposes.

In September 2017, the Company acquired Global Capacity. The Company paid $104.0 million in cash consideration, of which $4.0 million was net cash acquired, and issued 1,850,000 unregistered shares of the Company's common stock valued at $53.6 million at closing. The results of Global Capacity have been included from September 15, 2017. The acquisition was considered an asset purchase for tax purposes.

In June 2017, the Company acquired Perseus Telecom ("Perseus"). The Company paid $37.5 million in cash consideration, of which $0.1 million was net cash acquired, and assumed $1.9 million in capital leases. The results of Perseus have been included from June 1, 2017. Pro forma results of operations for this acquisition have not been presented as it is not material to the consolidated results of operations. The acquisition was considered a stock purchase for tax purposes.

In January 2017, the Company acquired Hibernia. The Company paid $529.6 million in cash consideration, of which $14.6 million was net cash acquired, and issued 3,329,872 unregistered shares of the Company's common stock, initially valued at $75.0 million on the date of announcement, and ultimately valued at $86.1 million at closing. The results of Hibernia have been included from January 1, 2017. The acquisition was considered an asset purchase for tax purposes.

The table below reflects the Company's estimates of the acquisition date fair values of the purchase consideration, assets acquired, and liabilities assumed for its material 2018 acquisition (amounts in millions):



	Interoute
Purchase Price
Cash paid at closing	$	2,239.3
Purchase consideration	$	2,239.3

Purchase Price Allocation
Assets acquired:
Cash	$	66.1
Accounts receivable	86.3
Prepaid expenses and other current assets	51.3
Property and equipment	1,435.9
Other assets	24.5
Intangible assets - customer lists	171.5
Intangible assets - tradename	2.1
Intangible assets - other	15.4
Deferred tax assets	35.9
Goodwill	1,040.6
Total assets acquired	2,929.6

Liabilities assumed:
Accounts payable	(75.5		)
Accrued expenses and other current liabilities	(115.2		)
Capital leases ⁽¹⁾	(42.4		)
Debt	(27.7		)
Deferred revenue	(242.7		)
Deferred tax liabilities	(148.8		)
Other long-term liabilities	(38.0		)
Total liabilities assumed	(690.3		)
Net assets acquired	$	2,239.3
(1) Includes $38.8 million of assumed long-term building leases.



	Hibernia			Global Capacity
Purchase Price
Cash paid at closing	$	529.6		$	104.0
Common stock ⁽¹⁾	86.1			53.6
Purchase consideration	$	615.7		$	157.6

Purchase Price Allocation
Assets acquired:
Current assets	$	42.6		$	25.7
Property and equipment	432.5			34.4
Other assets	0.1			2.5
Intangible assets - customer lists	166.7			41.2
Intangible assets - tradename	0.7			—
Intangible assets - other	—			4.6
Goodwill	201.1			88.8
Total assets acquired	843.7			197.2

Liabilities assumed:
Accounts payable
Current liabilities	(40.6		)	(24.1		)
Deferred revenue	(163.3		)	(15.5		)
Deferred tax liabilities	(24.1		)	—
Total liabilities assumed	(228.0		)	(39.6		)
Net assets acquired	$	615.7		$	157.6
(1) Common stock fair value for Hibernia equals the closing share price on the acquisition date of $27.80 less a discount for lack of marketability. Common stock fair value for Global Capacity equals the closing share price on the acquisition date of $30.85 less a discount for lack of marketability.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is not expected to be deductible for tax purposes. Goodwill will not be amortized but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present.

The Company initially recognizes the assets and liabilities acquired from the aforementioned acquisitions based on its preliminary estimates of their acquisition date fair values. As additional information becomes known regarding the acquired assets and assumed liabilities, management may make adjustments to the opening balance sheet of the acquired company up to the end of the measurement period, which is a one-year period following the acquisition date. The determination of the fair values of the acquired assets and liabilities assumed (and the related determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment.

Severance, restructuring and other exit costs include severance and other one-time benefits for terminated employees, termination charges for leases and supplier contracts, and other costs incurred associated with an exit activity. These costs are reported separately in the consolidated statements of operations. Refer to Note 11 - Severance, Restructuring, and Other Exit Costs of these consolidated financial statements for further information on severance, restructuring and other exit costs.

Transaction and integration costs include expenses associated with legal, accounting, regulatory, and other transition services rendered in connection with acquisitions, travel expense, and other non-recurring direct expenses associated with acquisitions. Transaction and integration costs are expensed as incurred in support of the integration. The Company incurred transaction and integration costs of $23.0 million, $40.5 million, and $19.1 million for the years ended December 31, 2019, 2018, and 2017, respectively. Transaction and integration costs have been included in selling, general and administrative expenses in the consolidated statements of operations and in cash flows from operating activities in the consolidated statements of cash flows during the years then ended.

The pro forma results presented below include the effects of the Company’s material 2018 acquisition as if the acquisition occurred on January 1, 2018. The pro forma net loss for the year ended December 31, 2018 includes adjustments to revenue and cost of telecommunications services to eliminate inter-company activity, adjustments to deferred revenue and deferred cost from the acquired companies, and IFRS to US GAAP adjustments for Interoute. The pro forma adjustments are based on historically reported transactions by the acquired companies. The pro forma results do not include any anticipated synergies or other expected benefits of the acquisitions. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated as of January 1, 2018 (amounts in millions, except per share data).



	Year Ended December 31,
	2018
Revenue	$	1,836.0
Net loss	$	(91.1	)

Loss per share:
Basic	$	(1.80	)
Diluted	$	(1.80	)

Denominator for basic EPS – weighted average shares	50,718,279
Denominator for diluted EPS – weighted average shares	50,718,279