Business combination

9 Months Ended

Oct. 31, 2020

Acquisition of WageWorks

On August 30, 2019, the Company closed the acquisition (the "Acquisition") of WageWorks, Inc. ("WageWorks") for $51.35 per share in cash, or approximately $2.0 billion to WageWorks stockholders. The Company financed the transaction through a combination of $816.9 million cash on hand plus net borrowings of approximately $1.22 billion, after deducting lender fees of approximately $30.5 million, under a term loan facility.

The Acquisition was accounted for under the acquisition method of accounting for business combinations. Consideration paid was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the Acquisition date. The initial allocation of the consideration paid was based on a preliminary valuation and was subject to adjustment during the measurement period (up to one year from the Acquisition date). The purchase price allocation was finalized in the third quarter of fiscal 2021.

The following table summarizes the Company's allocation of the consideration paid in the Acquisition:


(in millions)	Initial Allocation		Adjustments		Updated Allocation
Cash and cash equivalents	$	406.8	$	(14.5)	$	392.3
Other current assets	56.5		2.5		59.0
Property, plant, and equipment	26.6		—		26.6
Operating lease right-of-use assets	42.5		—		42.5
Intangible assets	715.3		—		715.3
Goodwill	1,330.5		(8.4)		1,322.1
Other assets	5.9		—		5.9
Client-held funds obligation	(237.5)		17.2		(220.3)
Other current liabilities	(69.1)		(3.3)		(72.4)
Other long-term liabilities	(26.7)		—		(26.7)
Deferred tax liability	(128.7)		6.5		(122.2)
Total consideration paid	$	2,122.1	$	—	$	2,122.1

Adjustments to the initial allocation were based on more detailed information obtained about the specific assets acquired, liabilities assumed, and tax-related matters.

Pro forma information

The unaudited pro forma results presented below include the effects of the Acquisition as if it had been consummated as of February 1, 2018, with adjustments to give effect to pro forma events that are directly attributable to the Acquisition, which include adjustments related to the amortization of acquired intangible assets, interest income and expense, and depreciation.

The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings from the integration of WageWorks. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations. The estimated pro forma revenue and net income (loss) include the alignment of accounting policies, the effect of fair value adjustments related to the Acquisition, associated tax effects and the impact of the borrowings to finance the Acquisition and related expenses.


(in thousands)	Three months ended October 31, 2019		Nine months ended October 31, 2019
Revenue	$	194,450	$	598,815
Net income (loss)	$	(3,286)	$	34,559