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Acquisitions, Merger Transaction and Business Combination Accounting (Notes)
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Acquisitions, Merger Transaction and Business Combination Accounting ACQUISITIONS, MERGER TRANSACTION AND BUSINESS COMBINATION ACCOUNTING
Ambit Transaction

On November 1, 2019 (Ambit Acquisition Date), Volt Asset Company, Inc., an indirect, wholly owned subsidiary of Vistra, completed the Ambit Transaction. Ambit is an energy retailer selling both electricity and natural gas products to residential and small business customers in 17 states. Vistra funded the purchase price of $555 million (including cash acquired and net working capital) using cash on hand. All of Ambit's outstanding debt was repaid from the purchase price at closing and not assumed by Vistra.

Crius Transaction

On July 15, 2019 (Crius Acquisition Date), Vienna Acquisition B.C. Ltd., an indirect, wholly owned subsidiary of Vistra, completed the acquisition of the equity interests of two wholly owned subsidiaries of Crius that indirectly own the operating business of Crius. Crius is an energy retailer selling both electricity and natural gas products to residential and small business customers in 19 states. Vistra funded the purchase price of $400 million (including $382 million for outstanding trust units) using cash on hand. In addition, Vistra assumed $140 million of outstanding debt and acquired $26 million of cash at the closing of the Crius Transaction. See Note 11 for discussion of debt assumed in the Crius Transaction.

Ambit and Crius Business Combination Accounting

We believe the Ambit Transaction has (i) augmented Vistra's existing retail marketing capabilities with additional direct selling capability and a proprietary technology platform, (ii) reduced risk and aided expansion into higher margin channels by improving Vistra's match of its generation to load profile due to a high degree of overlap of Vistra's generation fleet with Ambit's approximately 11 TWh of annual load, primarily in ERCOT and PJM and (iii) enhanced the integrated value proposition through collateral and transaction efficiencies, particularly via Ambit's retail electric portfolio.

We believe the Crius Transaction has (i) reduced risk and aided expansion into higher margin channels by improving Vistra's match of its generation to load profile due to a high degree of overlap of Vistra's generation fleet with Crius' approximately 10 TWh of annual electricity load, (ii) established a platform for growth by leveraging Vistra's existing retail marketing capabilities and Crius' experienced team and (iii) enhanced the integrated value proposition through collateral and transaction efficiencies, particularly via Crius' retail electric portfolio.
Each of the Ambit Transaction and Crius Transaction, respectively, was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Ambit Acquisition Date and Crius Acquisition Date, respectively. The combined results of operations are reported in our consolidated financial statements beginning as of the respective Ambit Acquisition Date and Crius Acquisition Date. A summary of the techniques used to estimate the fair value of the identifiable assets and liabilities, as well as their classification within the fair value hierarchy (see Note 15), is listed below:

Working capital was valued using available market information (Level 2).
Acquired derivatives were valued using the methods described in Note 15 (Level 2 or Level 3).
Acquired retail customer relationship was valued based on discounted cash flow analysis of acquired customers and estimated attrition rates (Level 3).
Crius' long-term debt was valued using a market approach (Level 2).

The following table summarizes the allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Ambit Transaction and Crius Transaction, respectively, as of the Ambit Acquisition Date and Crius Acquisition Date, respectively. The Ambit Transaction purchase price was $555 million (including cash acquired and net working capital) and the Crius Transaction purchase price was $400 million. The final purchase price allocations were completed in the second quarter of 2020 for the Crius Transaction and the third quarter of 2020 for the Ambit Transaction.
Ambit Transaction and Crius Transactions Final Purchase Price Allocations
Ambit TransactionCrius Transaction
Final
Purchase Price
Allocation
Measurement Period Adjustments recorded through September 30, 2020Final
Purchase Price
Allocation
Measurement Period Adjustments recorded through June 30, 2020
Cash and cash equivalents$49 $— $26 $— 
Net working capital32 (9)(42)
Accumulated deferred income taxes— — — (36)
Identifiable intangible assets218 (45)317 23 
Goodwill258 44 243 38 
Commodity and other derivative contractual assets23 — 18 — 
Other noncurrent assets13 — 17 (3)
Total assets acquired593 612 (20)
Identifiable intangible liabilities— — (34)
Long-term debt, including amounts due currently— — 140 — 
Commodity and other derivative contractual liabilities28 — 40 — 
Accumulated deferred income taxes— — 14 14 
Other noncurrent liabilities and deferred credits10 16 — 
Total liabilities assumed38 212 (20)
Identifiable net assets acquired$555 $— $400 $— 

Acquisition costs incurred in the Ambit Transaction and Crius Transaction totaled $1 million and $2 million, respectively. For the Ambit Acquisition Date through December 31, 2019, our consolidated statements of operations include revenues and net income acquired in the Ambit Transaction totaling $193 million and $2 million, respectively. For the Crius Acquisition Date through December 31, 2019, our consolidated statements of operations include revenues and net income acquired in the Crius Transaction totaling $453 million and zero, respectively. The net income acquired in the Ambit Transaction and Crius Transaction include intangible amortization and transition related expenses.
Ambit and Crius Transaction Unaudited Pro Forma Financial Information — The following unaudited consolidated pro forma financial information for the years ended December 31, 2019 and 2018 assumes that the Ambit and Crius Transactions occurred on January 1, 2018 (i.e., represents our results for the years ended December 31, 2019 and 2018 plus the results for either Ambit Transaction or Crius Transaction for the period not owned by us, respectively). The unaudited consolidated pro forma financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the Ambit Transaction and Crius Transaction been completed on January 1, 2018, nor is the unaudited consolidated pro forma financial information indicative of future results of operations, which may differ materially from the consolidated pro forma financial information presented here.
Ambit TransactionCrius Transaction
Year Ended December 31,Year Ended December 31,
2019201820192018
Revenues$12,931 $10,446 $12,373 $10,379 
Net income (loss) (a)$949 $(95)$876 $(43)
Net income (loss) attributable to Vistra$951 $(93)$878 $(41)
Net income (loss) attributable to Vistra per weighted average share of common stock outstanding — basic$1.92 $(0.18)$1.78 $(0.08)
Net income (loss) attributable to Vistra per weighted average share of common stock outstanding — diluted$1.90 $(0.18)$1.76 $(0.08)
__________
(a)Decrease in pro forma net income compared to consolidated net income is driven by unrealized losses on hedging activities of Crius and amortization of intangible assets.

The consolidated unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired and the related impacts on tax expense.

Dynegy Merger Transaction

On the Merger Date, Vistra and Dynegy completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra, with Vistra continuing as the surviving corporation. The Merger was intended to qualify as a tax-free reorganization under the IRC, so that none of Vistra, Dynegy or any of the Dynegy stockholders would recognize any gain or loss in the transaction, except that Dynegy stockholders could recognize a gain or loss with respect to cash received in lieu of fractional shares of Vistra's common stock. Vistra is the acquirer for both federal tax and accounting purposes.

On the Merger Date, each issued and outstanding share of Dynegy common stock, par value $0.01 per share, other than shares owned by Vistra or its subsidiaries, held in treasury by Dynegy or held by a subsidiary of Dynegy, was automatically converted into 0.652 shares of common stock, par value $0.01 per share, of Vistra (the Exchange Ratio), except that cash was paid in lieu of fractional shares, which resulted in Vistra issuing 94,409,573 shares of Vistra common stock to the former Dynegy stockholders, as well as converting stock options, equity-based awards, tangible equity units and warrants. The total number of Vistra shares outstanding at the close of the Merger was 522,932,453 shares. Dynegy stock options and equity-based awards outstanding immediately prior to the Merger Date were generally automatically converted upon completion of the Merger into stock options and equity-based awards, respectively, with respect to Vistra's common stock, after giving effect to the Exchange Ratio.

Dynegy Business Combination Accounting

We believe the Merger has provided and continues to provide significant strategic benefits and opportunities to Vistra, including increased scale and market diversification, rebalanced asset portfolio and improved earnings and cash flows. The Merger was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Merger Date. The combined results of operations are reported in our consolidated financial statements beginning as of the Merger Date. A summary of the techniques used to estimate the fair value of the identifiable assets and liabilities, as well as their classification within the fair value hierarchy (see Note 15), is listed below:

Working capital was valued using available market information (Level 2).
Acquired property, plant and equipment was valued using a combination of an income approach and a market approach. The income approach utilized a discounted cash flow analysis based upon a debt-free, free cash flow model (Level 3).
Acquired derivatives were valued using the methods described in Note 15 (Level 1, Level 2 or Level 3).
Contracts with terms that were not at current market prices were also valued using a discounted cash flow analysis (Level 3). The cash flows generated by the contracts were compared with their cash flows based on current market prices with the resulting difference discounted to present value and recorded as either an intangible asset or liability.
Long-term debt was valued using a market approach (Level 2).
AROs were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3).

The following table summarizes the consideration paid and the final allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Merger as of the Merger Date. Based on the opening price of Vistra common stock on the Merger Date, the purchase price was approximately $2.3 billion. During the three months ended March 31, 2019, the purchase price allocation was completed. During the period from April 9, 2018 through March 31, 2019, we updated the initial purchase price allocation with final valuations by increasing property, plant and equipment by $173 million, decreasing intangible assets by $36 million, increasing goodwill by $175 million, decreasing accounts receivable, inventory, prepaid expenses and other current assets by $10 million, increasing accumulated deferred tax asset by $127 million, decreasing other noncurrent assets by $113 million, increasing trade accounts payable and other current liabilities by $89 million, increasing other noncurrent liabilities by $177 million, increasing asset retirement obligations, including amounts due currently by $56 million as well as other minor adjustments. The valuation revisions were a result of updated inputs used in determining the fair value of the acquired assets and liabilities.

Dynegy shares outstanding as of April 9, 2018 (in millions)144.8 
Exchange Ratio0.652 
Vistra shares issued for Dynegy shares outstanding (in millions)94.4 
Opening price of Vistra common stock on April 9, 2018$19.87 
Purchase price for common stock$1,876 
Fair value of equity component of tangible equity units369 
Fair value of outstanding stock compensation awards attributable to pre-combination service26 
Fair value of outstanding warrants
Total purchase price$2,273 


Dynegy Merger Final Purchase Price Allocation
Cash and cash equivalents$445 
Trade accounts receivables, inventories, prepaid expenses and other current assets853 
Property, plant and equipment10,535 
Accumulated deferred income taxes518 
Identifiable intangible assets351 
Goodwill175 
Other noncurrent assets419 
Total assets acquired13,296 
Trade accounts payable and other current liabilities733 
Commodity and other derivative contractual assets and liabilities, net422 
Asset retirement obligations, including amounts due currently475 
Long-term debt, including amounts due currently8,919 
Other noncurrent liabilities469 
Total liabilities assumed11,018 
Identifiable net assets acquired2,278 
Noncontrolling interest in subsidiary
Total purchase price$2,273 
Acquisition costs incurred in the Merger totaled less than $1 million and $25 million for the years ended December 31, 2019 and 2018, respectively. For the period from the Merger Date through December 31, 2018, our consolidated statements of operations include revenues and net income (loss) acquired in the Merger totaling $3.902 billion and $224 million respectively.

Dynegy Merger Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the year ended December 31, 2018 assumes that the Merger occurred on January 1, 2018. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the Merger been completed on January 1, 2018, nor is the unaudited pro forma financial information indicative of future results of operations, which may differ materially from the pro forma financial information presented here.
Year Ended December 31, 2018
Revenues$10,595 
Net loss$(268)
Net loss attributable to Vistra$(265)
Net loss attributable to Vistra per weighted average share of common stock outstanding — basic$(0.52)
Net loss attributable to Vistra per weighted average share of common stock outstanding — diluted$(0.52)

The unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired, interest expense on debt assumed in the Merger, effects of the Merger on tax expense (benefit), changes in the expected impacts of the tax receivable agreement due to the Merger, and other related adjustments.