Acquisitions and Dispositions

6 Months Ended

Jun. 26, 2021

The Company strategically acquires companies in order to increase its footprint and offer products and services that diversify its existing offerings. These acquisitions are accounted for as business combinations using the acquisition method, whereby the purchase price is allocated to the assets acquired and liabilities assumed, based on their estimated fair values at the date of the acquisition.

2021 Acquisitions

During the six months ended June 26, 2021, the Company completed 13 acquisitions in the Car Wash segment, representing 30 car wash sites, each individually immaterial (the “2021 Car Wash Acquisitions”). The aggregate cash consideration paid for these acquisitions, net of cash acquired and liabilities assumed, was approximately $200 million.

A preliminary estimate of assets acquired and liabilities assumed for the 2021 Car Wash Acquisitions is as follows:


(in thousands)
Assets:
Cash	$	63
Right of use assets	2,611
Prepaid rent	16
Land and improvements	23,125
Building	104,725
Equipment	22,526
Net deferred tax assets	648
Assets held for sale	990
Assets acquired	154,704
Liabilities:
Prepaid liability	227
Deferred revenue	46
Lease liability	2,595
Liabilities assumed	2,868
Net assets acquired	151,836
Total consideration	199,971
Goodwill	$	48,135

We also acquired separately identifiable intangible assets which are not presented above until the valuation is finalized. All goodwill was allocated to the Car Wash segment and all is deductible for income tax purposes.

In addition, during the six months ended June 26, 2021, the Company completed the acquisition of three maintenance sites, each individually immaterial, which are included within the Company’s Maintenance segment (the “2021 Maintenance Acquisitions”). The aggregate cash consideration paid for these acquisitions, net of cash acquired and liabilities assumed, was $6 million.

A preliminary estimate of assets acquired and liabilities assumed for the 2021 Maintenance Acquisitions is as follows:


(in thousands)
Assets:
Land and improvements	$	575
Building	725
Equipment	700
Construction in progress	3,511
Assets acquired	5,511
Liabilities:
Lease liability	20
Liabilities assumed	20
Net assets acquired	5,491
Total consideration	5,637
Goodwill	$	146

2021 Dispositions

On April 27, 2021, the Company disposed of its 70% owned subsidiary, At-Pac Auto Parts Inc., for consideration of $2 million. A loss of less than $1 million was recognized within selling, general, and administrative expenses during the three and six months ended June 26, 2021 as a result of the sale. In addition, noncontrolling interest of $1 million was derecognized.

2020 Acquisitions

Acquisition of International Car Wash Group

On August 3, 2020, the Company completed the acquisition of Shine Holdco (UK) Limited, the holding company of ICWG, to expand on its service offerings by entering into the car wash business (the “ICWG Acquisition”). The ICWG Acquisition resulted in the Company acquiring 940 car wash centers in 14 countries across the United States, Europe, and Australia. The following table presents an updated estimate of the purchase price allocation for the ICWG Acquisition:


(in thousands, except shares)	August 3, 2020
Assets:
Cash	$	37,011
Accounts and notes receivable	2,591
Inventory	12,761
Fixed assets	692,486
Operating lease right-of-use assets	479,787
Definite-lived intangibles	5,972
Indefinite-lived intangibles	165,730
Other assets	7,476
Total assets acquired	1,403,814
Liabilities:
Accounts payable	13,435
Long-term debt	656,684
Deferred income tax liability	133,776
Operating lease liabilities	476,216
Derivative liabilities	12,714
Other liabilities	82,394
Total liabilities assumed	1,375,219
Net assets acquired	28,595
Non-controlling interest acquired	400
Total consideration paid (39,169,857 common shares)(1)	809,000
Goodwill	$	780,805

(1) Common shares issued as consideration have been adjusted to reflect an implied 88,990-for-one stock split that became effective on January 14, 2021. See Note 1 for additional information.

The preliminary fair value of the equity consideration was determined based on an estimated enterprise value using a market approach and income approach as of the purchase date, reduced by borrowings assumed. The Company updated its purchase accounting estimates during the three months ended March 27, 2021 related to the deferred tax liability and, as a result, reduced goodwill related to the ICWG Acquisition by approximately $1 million.

Acquisition of Fix Auto

On April 20, 2020, the Company acquired 100% of the outstanding equity of Fix Auto USA (“Fix Auto”), a franchisor and operator of collision repair centers, for $29 million, net of cash received of approximately $2 million. This acquisition resulted in the Company acquiring 150 franchised locations and 10 company-operated locations and increased the Company’s collision services footprint.

The assets acquired and liabilities assumed from Fix Auto are as follows:


(in thousands)	April 20, 2020
Assets:
Cash	$	2,020
Accounts and notes receivable, net	2,317
Inventory	414
Prepaid and other assets	293
Operating lease right-of-use assets	7,520
Fixed assets	1,023
Definite-lived intangibles	15,200
Assets acquired	28,787
Liabilities:
Accounts payable	1,835
Accrued expenses and other liabilities	2,919
Operating lease liability	7,520
Income taxes payable	673
Deferred income tax liability	3,770
Liabilities assumed	16,717
Net assets acquired	12,070
Total consideration	31,460
Goodwill	$	19,390

A summary of total consideration for Fix Auto is as follows:


(in thousands)
Cash	$	28,517
Fair value of contingent consideration	2,943
Total consideration	$	31,460

Other Acquisitions

During 2020, the Company completed the acquisition of 17 car wash sites, each individually immaterial, which are included within the Company’s Car Wash segment (the “2020 Car Wash Acquisitions”). The aggregate cash consideration paid for these acquisitions, net of cash acquired and liabilities assumed, was approximately $109 million.

The assets acquired and liabilities assumed for the 2020 Car Wash Acquisitions are as follows:


(in thousands)
Assets:
Cash	$	41
Land and improvements	18,635
Building	42,570
Equipment	12,125
Deferred tax assets	5,117
Assets acquired	78,488
Liabilities:
Deferred revenue	368
Liabilities assumed	368
Net assets acquired	78,120
Total consideration	108,771
Goodwill	$	30,651

The valuation for the acquisitions requires significant estimates and assumptions. The estimates are inherently uncertain and subject to revision as additional information is obtained during the measurement period for the acquisitions. There were no measurement period changes related to Fix Auto and the 2020 Car Wash Acquisitions during the six months ended June 26, 2021.