Business Combination BusinessCombinationsAbstract

12 Months Ended

Dec. 31, 2019

Business Combination Disclosure [Text Block]

Business Combinations

Acquisition of Cloverleaf

The Company completed the acquisition of privately-held Cloverleaf on May 1, 2019. A summary of the preliminary fair values of the assets acquired and liabilities assumed for total cash consideration of $1.24 billion, as well as adjustments made during 2019 (referred to as “measurement period adjustments”), is as follows (in thousands):



	Amounts Recognized as of the Acquisition Date		Measurement Period Adjustments ⁽¹⁾			Amounts Recognized as of the Acquisition Date (as Adjusted)⁽²⁾
Assets
Land	$	59,363	$	1,131		$	60,494
Buildings and improvements	687,821		(19,670		)	668,151
Machinery and equipment	144,825		822			145,647
Assets under construction	20,968		(3,994		)	16,974
Operating lease right-of-use assets	1,254		—			1,254
Cash and cash equivalents	4,332		—			4,332
Restricted cash	—		526			526
Accounts receivable	21,358		220			21,578
Goodwill	107,643		18,297			125,940
Acquired identifiable intangibles:
Customer relationships	241,738		8,608			250,346
Trade names and trademarks	1,623		—			1,623
Other assets	18,720		(11,668		)	7,052
Total assets	1,309,645		(5,728		)	1,303,917
Liabilities
Accounts payable and accrued expenses	30,905		12,598			43,503
Notes payable	17,179		(13,301		)	3,878
Operating lease obligations	1,254		—			1,254
Unearned revenue	3,536		—			3,536
Pension and postretirement benefits	2,020		(2,020		)	—
Deferred tax liability	9,063		(195		)	8,868
Total liabilities	63,957		(2,918		)	61,039
Total consideration for Cloverleaf acquisition	$	1,245,688	$	(2,810	)	$	1,242,878

⁽¹⁾ The measurement period adjustments recorded in 2019 did not have a significant impact on our Consolidated Statements of Operations for the year ended December 31, 2019.

⁽²⁾ The measurement period adjustments were primarily due to refinements to third party appraisals and carrying amounts of certain assets and liabilities, as well as adjustments to certain tax accounts based on, among other things, adjustments to deferred tax liabilities. The net impact of the measurement period adjustments results in a net increase to goodwill.

As the valuation of certain assets and liabilities for purposes of purchase price allocations are preliminary in nature, they are subject to adjustment as additional information is obtained about the facts and circumstances regarding these

assets and liabilities that existed at the acquisition date. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. Adjustments recorded subsequent to the acquisition date are detailed in the table above, and were not material to the Consolidated Balance Sheets, the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows. The preliminary purchase price allocation will be finalized within one year from the date of acquisition.

As shown above, the Company recorded approximately $125.9 million of goodwill related to the Cloverleaf Acquisition. The strategic benefits of the acquisition include the Company’s ability to add complementary customers into its network, provide an opportunity for growth in the Central and Southeast markets, deepen existing customer relationships, provide three expansion opportunities that are already under construction and leverage integration experience to drive synergies and further enhance the warehouse network for new and existing customers. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The Cloverleaf acquisition was completed through the acquisition of both stock and partnership units; the acquisition of partnership units allowed a portion of the goodwill recorded as a result of the Cloverleaf Acquisition to be deductible for federal income tax purposes. The goodwill related to the Cloverleaf Acquisition has been substantially assigned to the Warehouse segment, with a de minimis amount assigned to the Transportation segment. Deferred taxes may not be recorded for deductible goodwill unless the tax basis in goodwill exceeds the book basis, and the Company has not recorded any deferred taxes as a result. Deductible goodwill will be available to reduce taxable income for both the REIT and its domestic TRS.

Also shown above, in connection with the Cloverleaf Acquisition the Company recorded an intangible asset of approximately $250.3 million for customer relationships which has been assigned a useful life of 25 years, and approximately $1.6 million for trade names and trademarks which has been assigned a useful life of 1.5 years. These intangible assets will be amortized on a straight-line basis over their respective useful lives. Based on the discussion under goodwill above, the Cloverleaf Acquisition resulted in federal income tax deductibility for a portion of the intangible assets. The deductible intangible assets will be available to reduce taxable income for both the REIT and its domestic TRS. The Company has recorded a deferred tax liability of $1.9 million for intangible assets.

The unaudited pro forma financial information set forth below is based on the historical Consolidated Statements of Operations for the years ended December 31, 2019 and 2018, adjusted to give effect to the Cloverleaf Acquisition as if it had occurred on January 1, 2018. The pro forma adjustments primarily relate to acquisition expenses, depreciation expense on acquired assets, amortization of acquired intangibles, and estimated interest expense related to financing transactions, the proceeds of which were used to fund the acquisition of Cloverleaf.

On March 1, 2019, Cloverleaf acquired Zero Mountain, Inc. and Subsidiaries (Zero Mountain). As a result, we have included the results of operations of Zero Mountain in the below pro forma financial information. The pro forma adjustments made include the acquisition expenses incurred in connection with Cloverleaf’s acquisition of Zero Mountain.

The accompanying unaudited pro forma consolidated financial statements exclude the results of the Lanier acquisition, which was deemed immaterial. These statements are provided for illustrative purposes only and do not purport to represent what the actual Consolidated Statements of Operations of the Company or the Operating Partnership would have been had the Cloverleaf Acquisition occurred on the dates assumed, nor are they necessarily indicative of what the results of operations would be for any future periods.

Americold Realty Trust and Subsidiaries



	Pro forma (unaudited)
	(in thousands, except per share data)
	Years Ended December 31,
	2019		2018
Total revenue	$	1,859,265	$	1,829,048
Net income available to common shareholders⁽¹⁾	$	52,026	$	(3,232	)
Net income per share, diluted⁽²⁾	$	0.27	$	(0.02	)

Americold Realty Operating Partnership, L.P. and Subsidiaries



	Pro forma (unaudited)
	(in thousands, except per share data)
	Years Ended December 31,
	2019		2018
Total revenue	$	1,859,265	$	1,829,048
Net income available to common unitholders⁽¹⁾	$	52,026	$	(3,232	)
Net income per unit, diluted⁽²⁾	$	0.27	$	(0.02	)

⁽¹⁾ Pro forma net income available to common shareholders was adjusted to exclude $26.6 million of acquisition related costs incurred by the Company during the year ended December 31, 2019, and to include these charges in pro forma net income for the year ended December 31, 2018.

⁽²⁾Adjusted to give effect to the issuance of approximately 42.1 million common shares in connection with the Cloverleaf Acquisition.

Since the date of acquisition, total revenues of approximately $152.8 million and net income of approximately $9.0 million associated with properties and operations acquired in the Cloverleaf Acquisition are included in the Consolidated Statements of Operations for the year ended December 31, 2019.

Acquisition of Lanier

The Company completed the acquisition of privately-held Lanier on May 1, 2019 for total cash consideration of $81.9 million, net of cash received. The allocation of consideration primarily included $60.0 million of property, buildings and equipment, $6.4 million of goodwill, and $16.3 million of customer relationship intangible assets. The customer relationship asset has been assigned a useful life of twenty-five years and will be amortized on a straight-line basis. The goodwill recorded is primarily attributable to the strategic benefits of the acquisition including the increased presence in the north Georgia poultry market and leveraging integration experience to drive synergies and further enhance the warehouse network for new and existing customers. The Lanier acquisition was completed through the acquisition of both stock and partnership units; the acquisition of partnership units allowed a portion of the goodwill recorded to be deductible for federal income tax purposes. Deferred taxes may not be recorded for deductible goodwill unless the tax basis exceeds the book basis, and the Company has not recorded any deferred taxes as a result. Deductible goodwill will be available to reduce taxable income at both the REIT and its domestic TRS. Adjustments recorded subsequent to the acquisition date were not material to the Consolidated Balance Sheets, the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows. The preliminary purchase price allocation will be finalized within one year from the date of acquisition. We have included the financial results of the acquired operations in our Warehouse segment since the date of the acquistion.