Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2020

Acquisitions

Defenders Acquisition

During January 2020, the Company acquired Defender Holdings, Inc. (“Defenders”) (the “Defenders Acquisition”), which represented the acquisition of the Company’s largest independent dealer, for total consideration of approximately $289 million, which consisted of cash paid of $172 million, net of cash acquired, and the issuance of approximately 16 million shares of the Company’s common stock with a fair value of $114 million.

The following table summarizes the purchase price allocation of the estimated fair values of the net assets acquired and liabilities assumed as reflected in the condensed consolidated financial statements as of the date of acquisition:



Fair value of assets acquired and liabilities assumed (in thousands):
Cash	$	3,437
Accounts receivable	15,436
Inventories	17,950
Prepaid expenses and other current assets	16,752
Property and equipment	16,486
Goodwill	250,632
Contracts and related customer relationships	17,400
Other assets	18,734
Accounts payable	(14,937		)
Deferred revenue	(1,170		)
Accrued expenses and other current liabilities	(29,203		)
Deferred tax liabilities	(7,901		)
Other liabilities	(14,690		)
Total consideration transferred	$	288,926

The purchase price allocation reflects preliminary fair value estimates based on management analysis, including preliminary work performed by third-party valuation specialists. The Company will finalize the purchase price allocation no later than one year from the acquisition date. The acquired contracts and related customer relationships are amortized over 14 years. The Company recorded approximately $251 million of goodwill, none of which is deductible for tax purposes, which reflects the strategic value and expected synergies of Defenders to the Company. Additionally, the Company allocated the goodwill recognized as a result of the Defenders Acquisition to the U.S. reporting unit. The impact of Defenders on the Company’s Condensed Consolidated Statements of Operations during the three months ended March 31, 2020 and pro-forma results for the three months ended March 31, 2019 was not material.

In connection with the Defenders Acquisition, the Company settled a pre-existing relationship with Defenders related to customer accounts purchased from Defenders prior to the Defenders Acquisition. As a result, the Company recorded a charge in the amount of $81 million to merger, restructuring, integration, and other in the Condensed Consolidated Statements of Operations and reflected the associated cash payment as cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020.

Other Acquisitions

During the three months ended March 31, 2020, in addition to the Defenders Acquisition, the Company paid $8 million, net of cash acquired, related to other business acquisitions, which resulted in the recognition of $7 million of goodwill.