On November 1, 2019, the Company completed its merger with NRC, a provider of comprehensive environmental, compliance and waste management services to the marine and rail transportation, general industrial and energy industries. The addition of NRC’s substantial service network strengthens and expands US Ecology’s suite of environmental services, including new oil and gas exploration and production landfill disposal capabilities, and provides expanded opportunities to establish US Ecology as a leader in standby and emergency response services.

The total merger consideration was $1,024.8 million, comprised of the following:

(1)	The fair value of US Ecology common stock issued was calculated based on 9,337,949 shares of US Ecology common stock multiplied by the closing price of US Ecology common stock of $62.23 per share on October 31, 2019, the day immediately preceding the closing of the NRC Merger.

(2)

The fair value of replacement warrants issued was calculated based on 3,772,753 replacement warrants multiplied by the fair value per warrant of $11.89. The fair value per warrant was based on the closing price of the replaced NRC warrants (NYSE: NRCG.WS) of $2.33 on October 31, 2019, the day immediately preceding the closing of the NRC Merger, divided by the exchange ratio of 0.196 pursuant to the NRC Merger Agreement.

(3)

The fair value of replacement restricted stock units issued was calculated based on 118,239 replacement restricted stock units multiplied by the closing price of US Ecology common stock of $62.23 per share on October 31, 2019, the day immediately preceding the closing of the NRC Merger, further multiplied by the ratio of the precombination service period to the remaining vesting period, or approximately 1.9%.

(4)

The fair value of replacement stock options issued was calculated based on 29,400 replacement stock options multiplied by the fair value per option of $12.26. The fair value per option was calculated using the Black-Scholes option pricing model, with the following weighted-average assumptions: strike price of $52.30 per option, dividend yield of 1.2%; expected volatility of 28.9%; average risk-free interest rate of 1.5%; and an expected term of 1 year. The replacement stock options became fully vested at the merger date therefore the entire fair value is considered merger consideration.

The payment of transaction fees and expenses and repayment of $398.4 million of NRC’s debt were funded using proceeds from a $450.0 million seven-year term loan. See Note 16 for additional information on the Company’s debt.

As of October 31, 2020, the Company finalized the purchase accounting for the NRC Merger. The following table summarizes the final NRC Merger purchase price allocation:


	Purchase Price
$s in thousands	Allocation
Current assets	$	130,110
Property and equipment		170,208
Identifiable intangible assets		309,500
Other assets		41,687
Current liabilities		(89,733)
Deferred income tax liabilities		(54,974)
Other liabilities		(59,363)
Total identifiable net assets		447,435
Goodwill		577,398
Total purchase price	$	1,024,833

Goodwill of $577.4 million arising from the acquisition is primarily attributable to the assembled workforce of NRC and expected synergies from combining operations. $399.5 million of the goodwill recognized was allocated to our Energy Waste segment and $177.9 million of the goodwill recognized was allocated to our Field Services segment. We expect $33.3 million of the acquired goodwill to be deductible for income tax purposes.

The fair value of identifiable intangible assets related to the acquisition of NRC by major intangible asset class and corresponding weighted average amortization period are as follows:


			Average
			Amortization
$s in thousands	Fair Value		Period (Years)
Amortizing intangible assets:
Customer relationships - noncontractual	$	199,600	14
Customer relationships - contractual		34,400	7
Permits and licenses		8,700	16
Tradenames		6,100	2
Non-compete agreements		3,300	2
Total identified amortizing intangible assets		252,100
Non-amortizing intangible assets:
Permits and licenses		57,400	n/a
Total identified intangible assets	$	309,500

The following unaudited pro forma financial information presents the combined results of operations as if NRC had been combined with US Ecology as of January 1, 2019. The pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property, plant and equipment, and interest expense. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of our future consolidated results of operations.


	(unaudited)
$s in thousands	2019
Pro forma combined:
Revenue	$	1,048,745
Net income (loss)	$	11,775

The amounts of revenue and operating loss from NRC included in the Company’s consolidated statements of operations for the year ended December 31, 2019 was $70.2 million and $9.1 million, respectively. NRC Merger-related business development and integration expenses of $2.4 million, $11.5 million and $24.4 million are included in Selling, general

and administrative expenses in the Company’s consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019, respectively.

Acquisition of Impact Environmental Services, Inc.

On January 28, 2020, we acquired Impact Environmental Services, Inc., an industrial cleaning and environmental services company based in Romulus, Michigan for $3.3 million. The acquired operations are reported as part of our Field Services segment, however, revenues, net income, earnings per share and total assets are not material to our consolidated financial position or results of operations.

We allocated the purchase price to the assets acquired and liabilities assumed based on estimates of the fair value at the date of the acquisition, resulting in $300,000 allocated to goodwill and $900,000 allocated to amortizing intangible assets (primarily customer relationships) to be amortized over a weighted average life of approximately 12 years. All of the goodwill recognized was assigned to our Field Services segment and is expected to be deductible for income tax purposes over a 15-year amortization period.

W.I.S.E. Environmental Solutions Inc.

On August 1, 2019, we acquired 100% of the outstanding shares of W.I.S.E. Environmental Solutions Inc. (“US Ecology Sarnia”), an equipment rental and waste services company based in Sarnia, Ontario, Canada for 23.5 million Canadian dollars, which translated to $17.9 million at the time of transaction and was funded with borrowings under the Credit Agreement. US Ecology Sarnia is reported as part of our Field Services segment. The Company assessed the revenues, net income, earnings per share and total assets of US Ecology Sarnia and concluded they are not material to our consolidated financial position or results of operations. As such, pro forma financial information has not been provided.

We allocated the purchase price to the assets acquired and liabilities assumed based on estimates of the fair value at the date of the acquisition, resulting in $7.7 million allocated to goodwill and $6.2 million allocated to intangible assets (primarily customer relationships) to be amortized over a weighted average life of approximately 14 years.

Goodwill of $7.7 million arising from the acquisition is attributable to the assembled workforce and the future economic benefits of synergies with our other regional facilities and expansion into new markets. All of the goodwill recognized was assigned to our Field Services segment and is not expected to be deductible for income tax purposes.