Business Acquisition

6 Months Ended

Jun. 30, 2021

Business Acquisition

On April 1, 2021, we acquired Kantar Health, a division of Kantar Group. Kantar Health provides data, analytics, commercial research, and consulting services to the life sciences industry. We believe this acquisition complements our existing Data-as-a-Service efforts as it provides a meaningful entry into the pharmaceutical market through Kantar Health's existing clients and their leadership team with important industry experience and relationships. These factors, combined with the synergies and economies of scale expected, are the basis for the acquisition and comprise the resulting goodwill recorded.

Consideration for the acquisition was a base cash purchase price of $375 million. The base purchase price is subject to post-closing adjustments for working capital and certain other adjustments, as specified in the Securities Purchase Agreement dated December 16, 2020, as amended.

Our acquisition of Kantar Health is being treated as a purchase in accordance with ASC 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes, as appraisals of intangible assets are finalized, working capital and certain other adjustments are agreed upon, and additional information becomes available. The following is a summary of the preliminary allocation of purchase price:


(In thousands)	Allocation Amount

Cash and cash equivalents	$	14,541
Receivables, net	30,895
Prepaid expenses and other	13,860
Property and equipment, net	1,136
Right-of-use assets	1,680
Goodwill	210,247
Intangible assets, net:
Customer relationships	143,100
Existing technologies	39,700
Trade names	10,200
Other assets	26
Accounts payable	(34,215)
Deferred revenue	(36,656)
Accrued payroll and tax withholdings	(9,910)
Other current liabilities	(3,777)
Deferred income taxes	(10,169)
Other liabilities	(6,248)

Total purchase price	$	364,410

The fair values of the acquired intangible assets were estimated by applying the income approach. Such estimations required the use of inputs that were unobservable in the marketplace (Level 3), including a discount rate that we estimated would be used by a market participant in valuing these assets, projections of revenues and cash flows, and client attrition rates, among others. The acquired intangible assets are being amortized over a weighted-average period of 13 years. Refer to Note (7) for further information about the fair value level hierarchy.

The goodwill of $210 million was allocated among our Domestic and International operating segments, as shown below, with approximately $160 million of such goodwill expected to be deductible for tax purposes.

The changes in the carrying amounts of goodwill for the six months ended June 30, 2021 were as follows:


(In thousands)	Domestic		International		Total

Beginning balance at December 31, 2020	$	854,188	$	60,332	$	914,520
Goodwill recorded in connection with the Kantar Health acquisition	118,386		91,861		210,247
Foreign currency translation adjustment and other	—		4,932		4,932

Ending balance at June 30, 2021	$	972,574	$	157,125	$	1,129,699

Our condensed consolidated statements of operations for the three and six months ended June 30, 2021 include revenues of $45 million attributable to the acquired business since the April 1, 2021 acquisition date. The earnings contribution from the acquired business for the three and six months ended June 30, 2021 was not material to our condensed consolidated financial statements. Pro forma results of operations, assuming the acquisition was made at the beginning of the earliest period presented, have not been presented because the effect of this acquisition was not material to our results.