Acquisitions and Dispositions

3 Months Ended

Dec. 28, 2019

Acquisitions and Dispositions [Abstract]

Acquisitions and Dispositions

4.  Acquisitions and Dispositions

RPC Group Plc

In July 2019, the Company completed the acquisition of the entire outstanding share capital of RPC Group Plc (“RPC”), for aggregate consideration of $6.1 billion. RPC is a leading plastic product design and engineering company for packaging and select non-packaging markets, with 189 sites in 34 countries. RPC develops and manufactures a diverse range of products for a wide variety of customers, including many household names, and enjoys strong market positions in many of the end markets it serves and the geographical areas in which it operates. It uses a wide range of polymer conversion techniques in both rigid and flexible plastics manufacture, and is one of the largest plastic converters in Europe. The international based facilities are operated within the Consumer Packaging International segment with the remaining U.S. based facilities operated within the Consumer Packaging North America segment.  The results of RPC have been included in the consolidated results of the Company since the date of the acquisition.

The acquisition has been accounted for under the purchase method of accounting.  Under this method, the assets acquired and liabilities assumed have been recorded based on preliminary estimates of fair value.  The preliminary fair value estimates were determined based on our historical acquisition experience.  The final purchase accounting allocations for the RPC acquisition will depend on a number of factors, including the final valuation of our long-lived tangible and identified intangible assets acquired and liabilities assumed, and finalization of income tax effects of the opening balance sheet.  The actual fair values of RPC’s assets acquired, liabilities assumed and resulting goodwill may differ materially once finalized.  The preliminary estimated fair value of assets acquired and liabilities assumed consisted of working capital of $700 million, property and equipment of $2,375 million, intangible assets of $1,712 million, goodwill of $2,205 million and other assets and long-term liabilities of $922 million.  The working capital includes a $39 million step up of inventory to fair value.  The Company has recognized goodwill on this transaction primarily as a result of expected cost synergies, and expects goodwill to be partially deductible for tax purposes.

To finance the purchase, the Company issued $1,250 million aggregate principal amount of 4.875% first priority senior secured notes due 2026, $500 million aggregate principal amount of 5.625% second priority senior secured notes due 2027, and entered into incremental term loans due July 2026, to fund the remainder of the purchase price.

When including RPC results for the periods prior to the acquisition date, unaudited pro forma net sales and net income were $3.2 billion and $97 million, respectively, for the quarterly period ended December 29, 2018.  The unaudited pro forma net sales and net income assume that the RPC acquisition had occurred as of the beginning of the period.

Seal For Life

In July 2019, the Company completed the sale of its Seal For Life ("SFL") business which was operated in our Health, Hygiene & Specialties reporting segment for net proceeds of $325 million.  SFL recorded $96 million in net sales during fiscal 2019.