Acquisition

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition

ACQUISITION

On May 13, 2021, we completed the acquisition of all the outstanding equity interests in Georgia-Pacific Mt. Holly LLC, Georgia-Pacific's U.S. nonwovens business ("Mount Holly") for $170.9 million. Mount Holly’s results are reported prospectively from the acquisition date as part of our Airlaid Materials segment.

On October 29, 2021, we completed the acquisition of PMM Holding (Luxembourg) AG, the owner of all of the equity interest in Jacob Holm, a global leading manufacturer of premium quality spunlace nonwoven fabrics for critical

cleaning, high-performance materials, personal care, hygiene and medical applications, for approximately $304.0 million for all outstanding shares and the extinguishment of Jacob Holm’s debt.

For the quarter ended June 30, 2022, we adjusted the preliminary purchase price allocation related to the Jacob Holm acquisition by reducing preacquistion compensation incentive accruals by approximately $0.5 million, and reducing goodwill by the same amount, based on incentive payouts made during the quarter.

The following table sets forth information related to the consideration exchanged for each acquisition.

In thousands	Mount Holly		Jacob Holm		Total
Total consideration	$	170,919	$	303,952	$	474,871
Less: Debt repaid	—		(148,000)		(148,000)
Cash consideration	$	170,919	$	155,952	$	326,871

The preliminary purchase price allocations set forth in the following table are based on all information available to us at the present time and is subject to change. With respect to the Mount Holly acquisition, the purchase price allocation is complete. However, the Jacob Holm purchase price allocation is preliminary as we are in the process of finalizing our analysis of certain matters, primarily related to the assessment of potential tax liabilities associated with the acquired entities. In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected.

In thousands	Mount Holly		Jacob Holm		Total
Assets
Cash and cash equivalents	$	—	$	11,426	$	11,426
Accounts receivable	11,599		30,271		41,870
Inventory	7,031		45,340		52,371
Prepaid and other current assets	11		6,727		6,738
Plant, equipment and timberlands	100,498		158,612		259,110
Intangible assets	20,000		70,240		90,240
Goodwill	35,793		48,355		84,148
Other assets	8,041		26,929		34,970
Total assets	182,973		397,900		580,873
Liabilities
Short-term debt			14,081		14,081
Accounts payable	2,321		25,264		27,585
Other current liabilities	1,868		21,263		23,131
Other long-term liabilities	7,865		33,340		41,205
Total liabilities	12,054		93,948		106,002
Total preliminary purchase price	$	170,919	$	303,952	$	474,871

The preliminary purchase price allocations set forth in the table above are based on all information available to us at the present time and is subject to change. In the event new information becomes available, the measurement of the amount of goodwill reflected may be affected. For purposes of allocating the total purchase price, assets acquired and liabilities assumed are recorded at their estimated fair market values. The allocations set forth above are based on management’s estimate of the fair value using valuation techniques such as discounted cash flow models, appraisals and similar methodologies.

The following table sets forth information related to amounts of net sales and operating income (loss) of the acquired businesses included in our results of operations in the three and six months ended 2022:

	Three months ended June 30,		Six months ended June 30,
In thousands	2022		2022
Mount Holly
Net sales	$	26,300	$	53,604
Operating income	1,911		4,635
Jacob Holm
Net sales	96,917		193,304
Operating loss	(1,808)		(3,380)

The following table summarizes annual unaudited pro forma financial information as if the acquisition occurred as of January 1, 2021:

(unaudited)	Three months ended June 30,		Six months ended June 30,
In thousands, except per share	2021		2021
Pro forma
Net sales	$	347,895	$	690,448
Income (loss) from continuing operations	(10,546)		12,892

The pro forma financial information set forth above for the three and six months ended June 30, 2021 includes $3.7 million and $4.3 million, respectively, of one-time costs directly related to the Mount Holly transaction. Such costs are presented under the caption “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income.