Acquisitions

On November 12, 2018, we entered into an equity purchase agreement to acquire 100% of the capital stock of Sonneborn. The acquisition closed on February 1, 2019. Sonneborn is a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

Aggregate consideration totaled $702.3 million and consists of $663.4 million in cash paid at acquisition, net of cash acquired, subject to final working capital settlement pursuant to the purchase agreement.

This transaction is accounted for as a business combination using the acquisition method of accounting, with the purchase price allocated to the fair value of the acquired Sonneborn assets and liabilities as of the February 1 acquisition date, with the excess purchase price recorded as goodwill assigned to our Lubricants and Specialty Products segment.

The following summarizes our preliminary value estimates of the Sonneborn assets and liabilities acquired on February 1, 2019:



	(In millions)
Cash and cash equivalents	$	38.9
Accounts receivable and other current assets	58.8
Inventories	81.0
Properties, plants and equipment	167.6
Goodwill	280.0
Intangibles and other noncurrent assets	235.2
Accounts payable and accrued liabilities	(51.4		)
Deferred income tax liabilities	(81.9		)
Other long-term liabilities	(25.9		)
	$	702.3

The preliminary purchase price allocation resulted in the recognition of $280.0 million in goodwill, which relates to the established workforce and global market presence of the acquired business as well as the expected synergies to be gained upon combining with our existing operations to form an expanded lubricants and specialty products business.

Intangibles include customer relationships, trademarks, patents and technical know-how totaling $209.6 million that are being amortized on a straight-line basis over a 12-year period.

These values, including deferred taxes, are preliminary and, therefore, may change once we complete our valuations.

Our consolidated financial and operating results reflect the Sonneborn operations beginning February 1, 2019. Our results of operations for the three months ended March 31, 2019 included revenues and loss before income taxes of $64.3 million and $7.1 million, respectively, related to these operations.

As of March 31, 2019, we have incurred $12.6 million in incremental direct acquisition and integration costs that principally relate to legal, advisory and other professional fees and are presented as selling, general and administrative expenses.

Assuming the acquisition of Sonneborn had occurred as of January 1, 2018, proforma revenue for our Lubricants and Specialty Products segment was $540.1 million and proforma operating income was $32.9 million for the first quarter of 2018. Proforma revenue was $525.6 million and proforma operating income was $3.7 million for the first quarter of 2019. The proforma effects on consolidated HFC revenue and operating income are not material.