Business Combinations

3 Months Ended

Dec. 31, 2022

BUSINESS COMBINATIONS

The Company acquired 7 service center stores in single and multi-store transactions for an aggregate purchase price of $9.6 million during the three months ended December 31, 2022. These acquisitions contribute to Valvoline's retail presence in key North American markets and its increased footprint to 1,746 system-wide service center stores.

During the three months ended December 31, 2021, the Company acquired 12 service center stores in single and multi-store transactions for an aggregate purchase price of $13.6 million.

The Company’s acquisitions are accounted for as business combinations. A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the three months ended December 31:


(In millions)	2022		2021


Inventories	$	0.3	$	—

Property, plant and equipment (a)	2.0		2.3
Operating lease assets	2.1		4.3

Goodwill (b)	6.1		11.2
Intangible assets (c)
Reacquired franchise rights (d)	2.3		—


Other	0.1		0.1


Other current liabilities	(0.2)		(0.2)
Operating lease liabilities	(2.0)		(4.1)
Other noncurrent liabilities	(1.1)		—
Total net assets acquired	$	9.6	$	13.6

(a)Includes $1.1 million of finance lease assets in property, plant and equipment and finance lease liabilities of $1.1 million in noncurrent liabilities for leases acquired during the three months ended December 31, 2022. No finance lease assets or liabilities were acquired during the three months ended December 31, 2021.

(b)Goodwill is generally expected to be deductible for income tax purposes and is primarily attributed to the operational synergies and potential growth expected to result in economic benefits in the respective markets of the acquisitions.

(c)Intangible assets acquired during the three months ended December 31, 2022 and 2021 have weighted average amortization periods of 9 and 5 years, respectively.

(d)Prior to the acquisition of former franchise service center stores, the Company licensed the right to operate franchised service centers, including the use of Valvoline's trademarks and trade name. In connection with these acquisitions, Valvoline reacquired those rights and recognized separate definite-lived reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately 10 years for the rights reacquired in fiscal 2023. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market.

The fair values above are preliminary for up to one year from the date of acquisition as they may be subject to measurement period adjustments if new information is obtained about facts and circumstances that existed as of the acquisition date. The Company does not currently expect any material changes to the preliminary purchase price allocations for acquisitions completed during the last twelve months.