ACQUISITIONS

BUSINESS COMBINATIONS

Assets acquired and liabilities assumed in business combinations are recorded on the Company’s Condensed Consolidated Balance Sheets as of the respective acquisition date based upon the estimated fair values at such date. The results of operations of the business acquired by the Company are included in the Company’s Condensed Consolidated Statements of Earnings since the respective date of acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed is allocated to Goodwill.

During the first quarter of fiscal year 2017, the Company acquired one business in the Investor Communication Solutions segment:

NACC

In July 2016, the Company acquired the net assets of NACC, a leading provider of customer communication services including print and digital communication solutions, content management, postal optimization, and fulfillment. This acquisition will expand the Company’s existing customer communications business.

The aggregate purchase price was $410.0 million in cash, or $406.2 million net of cash acquired and other closing adjustments. Net tangible assets acquired in the transaction were $58.8 million. This acquisition resulted in $129.2 million of Goodwill, which is primarily tax deductible. Intangible assets acquired, which totaled $218.2 million, consist primarily of customer relationships and software technology. The results of NACC’s operations were included in the Company’s Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q from the date of acquisition. As of March 31, 2017, the NACC purchase price allocation has not yet been finalized, primarily the fair values and the useful lives of the acquired intangible assets.

The following summarizes the preliminary allocation of purchase price for the NACC acquisition (in millions):



	NACC

Accounts receivable, net	$	89.2
Other current assets	19.5
Property, plant and equipment	45.1
Intangible assets	218.2
Goodwill	129.2
Other non-current assets	1.6
Accounts payable	(14.4		)
Accrued expenses and other current liabilities	(59.1		)
Deferred taxes	(22.2		)
Deferred revenue	(1.1		)
Consideration paid, net of cash acquired	$	406.2

Unaudited Pro Forma Financial Information

The unaudited pro forma condensed consolidated results of operations in the table below are provided for illustrative purposes only and summarize the combined results of operations of Broadridge and NACC. For purposes of this pro forma presentation, the acquisition of NACC is assumed to have occurred on July 1, 2015. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets (of which the purchase accounting allocation has not yet been finalized), interest expense from a recent bond offering, the proceeds of which were used to fund the acquisition, and certain integration related expenses.

This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on July 1, 2015, nor of the results of operations that may be obtained in the future.



	Three Months Ended March 31, 2017				Nine Months Ended March 31, 2017
	2017		2016		2017		2016
	(in millions, except per share data)
Revenues	$	1,008.9	$	1,003.4	$	2,796.8	$	2,804.0
Net earnings	$	77.8	$	69.0	$	143.5	$	146.0

Basic earnings per share	$	0.66	$	0.58	$	1.21	$	1.23
Diluted earnings per share	$	0.64	$	0.57	$	1.18	$	1.20

During the second quarter of fiscal year 2017, the Company acquired one business in the Global Technology and Operations segment:

M&O

In November 2016, the Company’s Global Technology and Operations segment acquired M&O. M&O is a provider of SaaS-based compensation management and related solutions for broker-dealers and registered investment advisors. The aggregate purchase price was $24.8 million in cash, consisting of $22.3 million of cash payments as well as a $2.5 million note payable to the sellers that will be settled in the future. Net tangible liabilities assumed in the transaction were $3.5 million. This acquisition resulted in $17.1 million of Goodwill. Intangible assets acquired, which totaled $11.2 million, consist primarily of customer relationships and acquired software technology, which are being amortized over a seven-year life and six-year life, respectively. The allocation of the purchase price will be finalized upon completion of the analysis of the fair values of the acquired business’ assets and liabilities, which is still subject to a working capital adjustment.

During the third quarter of fiscal year 2017, the Company acquired one business in the Global Technology and Operations segment:

MAL

In March 2017, the Company’s Global Technology and Operations segment acquired MAL, which is a specialist provider of post-trade control solutions for sell-side and buy-side firms. The Company previously owned 25% of MAL, and purchased the remaining 75% for an aggregate purchase price of $23.7 million in cash, consisting of $19.7 million of cash payments net of cash acquired, a $3.1 million note payable to the sellers that will be settled in the future, and a contingent consideration liability with an initial estimated acquisition date preliminary fair value of $0.9 million. The contingent consideration liability is payable over the next four years upon the achievement by the acquired business of certain revenue and earnings targets. The contingent consideration liability has a maximum potential pay-out of $2.8 million upon the achievement in full of the defined financial targets by the acquired business. The fair value of the Company’s 25% pre-existing investment in MAL was determined to be $9.6 million, implied by the aggregate purchase price of the remaining 75% purchased, which resulted in a non-cash, nontaxable gain on investment of $9.3 million (“MAL investment gain”), included as part of Other non-operating (income) expenses, net. Net tangible liabilities assumed in the transaction were $0.7 million. This acquisition preliminarily resulted in $34.0 million of Goodwill. The allocation of the purchase price will be finalized upon completion of the fair values of the acquired business’ assets and liabilities, including the fair value of acquired intangible assets, and which is still subject to a working capital adjustment.

ASSET ACQUISITIONS

Purchase of Intellectual Property

In September 2016, the Company’s Investor Communication Solutions segment acquired intellectual property assets from Inveshare and concurrently entered into a development agreement with an affiliate of Inveshare to use these assets to develop blockchain technology applications for Broadridge’s proxy business. The purchase price was $95.0 million, which consisted of a $90.0 million cash payment upon closing of the acquisition and a $5.0 million obligation payable which the Company expects to pay by September 2017, plus an additional deferred payment of $40.0 million to an affiliate of Inveshare upon delivery of the new blockchain technology applications, which the Company expects to pay by September 2018.