Business Acquisitions

On February 7, 2019, the Company acquired VFC, see Note 1 for further information.

The acquisition date fair value of the consideration transferred consisted of the following (dollars in millions, except per share data):




Total Covetrus shares issued to VFC shareholders	39,742,089
Per share price (in actuals)*	$	43.05
Total fair value of shares issued to VFC shareholders	$	1,711
Fair value of VFC replacement stock option awards attributable to pre-merger service	62
VFC debt repaid at close	24
VFC expenses paid at close	18
Less VFC cash used to fund transaction	(9		)
Total consideration	$	1,806

*Closing price on February 7, 2019, Covetrus shares trading on a when-issued basis (Nasdaq: CVET)

The purchase price was allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed:



Dollars in millions
Book value of net assets acquired	$	14
Goodwill	1,358
Intangible assets	545
Deferred tax liabilities	(111		)
Total consideration	$	1,806

The size and breadth of the Merger necessitates use of the one year measurement period to adequately analyze all the factors used in establishing the asset and liability fair values as of the acquisition date, including, but not limited to intangible assets and deferred tax liabilities.

The Company determined the estimated fair value of the identifiable intangible assets after review and consideration of relevant information including discounted cash flow analysis, market data and management’s estimates. The Company engaged an independent valuation firm to assist in determining the fair value of the acquired intangible assets. The value attributed to the other identifiable intangible assets included $20 million in trademarks and trade names, $50 million in product formulas, $125 million in customer relationships and $350 million in developed technologies. These intangible assets are being amortized over a weighted average period of seven years.

The goodwill from this transaction arose as a result of the Company’s expected ability to leverage existing and new marketing opportunities across a larger revenue base. The goodwill from this transaction is not deductible for tax purposes.

The following unaudited pro forma financial information presents the results of our operations for the three months ended March 31, 2019 and 2018, as if the acquisition had occurred as of December 31, 2017. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees, and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on December 31, 2017 (dollars in millions, except per share data):



	Three Months Ended March 31,
	2019			2018
Net Sales	$	965		$	992
Net income (loss)	(24		)	(13		)
Net income (loss) attributable to Covetrus	(23		)	(13		)

Net income per common share: basic	$	(0.25	)	$	(0.19	)
Net income per common share: diluted	$	(0.25	)	$	(0.19	)