Business Combinations

9 Months Ended

Jun. 30, 2023

BUSINESS COMBINATIONS

The Company acquired 23 service center stores in single and multi-store transactions for an aggregate purchase price of $27.8 million during the nine months ended June 30, 2023. These acquisitions expand Valvoline's retail presence in key North American markets, increase the number of company-operated service center stores, and contributed to growing the retail footprint to over 1,800 system-wide service center stores.

During the nine months ended June 30, 2022, the Company acquired 31 service center stores in single and multi-store transactions for an aggregate purchase price of $42.7 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 nine months ended June 30:


(In millions)	2023		2022


Inventories	$	0.4	$	0.3

Property, plant and equipment (a)	5.9		7.6
Operating lease assets	6.1		8.9
Goodwill (b)	21.1		34.3
Intangible assets (c)
Reacquired franchise rights (d)	4.0		0.6


Other	0.2		0.3


Other current liabilities (a)	(0.6)		(0.6)
Operating lease liabilities	(5.7)		(8.3)
Other noncurrent liabilities (a)	(3.6)		(0.4)
Total net assets acquired	$	27.8	$	42.7

(a)Includes finance lease assets in property, plant and equipment and finance lease liabilities in other current and noncurrent liabilities. During the nine months ended June 30, 2023, finance lease assets acquired were $3.8 million and finance lease liabilities of $0.2 million and $3.6 million in other current and noncurrent liabilities, respectively. During the nine months ended June 30, 2022, finance lease assets acquired were $0.4 million and finance lease liabilities of $0.4 million in other noncurrent liabilities.

(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 nine months ended June 30, 2023 and 2022 have weighted average amortization periods of 9 and 7 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 9 and 8 years for the rights reacquired in fiscal 2023 and 2022, respectively. 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.