Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2025

Acquisitions and Divestitures

Acquisitions and Divestitures

8.   Acquisitions and Divestitures

Acquisitions

Stericycle Acquisition

On June 3, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire all outstanding shares of Stericycle for $62.00 per share in cash, representing a total enterprise value of approximately $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt. The acquisition expands our offerings in the U.S., Canada and parts of Western Europe by providing regulated waste and compliance services and secure information destruction services that protect people and brands, promote health and well-being and safeguard the environment. The transaction closed on November 4, 2024 and was funded using borrowings under a term credit agreement, commercial paper program and available cash on hand. Shortly thereafter, we repaid all outstanding borrowings under the term credit agreement with net proceeds from our November 2024 issuance of $5.2 billion of senior notes.

Our consolidated financial statements have not been retroactively restated to include Stericycle’s historical financial position or results of operations. The acquisition is accounted for as a business combination. In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. We are in the process of valuing all of the assets and liabilities acquired in the acquisition and until we have completed our valuation process, there may be adjustments to our estimates of fair value and resulting preliminary purchase price allocation.

Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The areas of acquisition accounting that are not yet finalized primarily relate to (i) finalizing the review and valuation of trade names, permits, customer relationships and certain property plant and equipment and other intangibles (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable and amortizable assets and (ii) finalizing the review and valuation of accounts receivable, accrued expenses, contingent liabilities, deferred taxes and goodwill (including key assumptions, inputs and estimates).

Goodwill of $3.7 billion was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits expected to arise from other assets acquired that could not be individually identified and separately recognized and from synergies of the combination. During the first quarter of 2025, we finalized the determination of our reporting units related to the Stericycle acquisition and allocated the goodwill balance to two reporting units within our WM Healthcare Solutions segment using a relative fair value allocation method. Substantially all of the goodwill is not deductible for income tax purposes.

The following table shows the preliminary purchase price allocation as of the date acquired and adjustments to March 31, 2025 (in millions):

		November 4, 2024		Adjustments		March 31, 2025
Cash and cash equivalents	$	198	$	—	$	198
Accounts and other receivables		506		(14)		492
Parts and supplies		19		—		19
Other current assets		64		(1)		63
Assets held for sale (a)		125		(3)		122
Property and equipment		782		(1)		781
Goodwill		3,633		72		3,705
Other intangible assets		3,536		(68)		3,468
Other assets		619		—		619
Accounts payable		(186)		3		(183)
Accrued liabilities		(336)		(17)		(353)
Deferred revenues		(77)		—		(77)
Current portion of long-term debt		(5)		—		(5)
Liabilities held for sale (a)		(35)		—		(35)
Long-term debt, less current portion		(510)		—		(510)
Deferred income taxes		(884)		25		(859)
Other liabilities		(542)		—		(542)
Total purchase price	$	6,907	$	(4)	$	6,903

(a) Represents Stericycle’s Spain and Portugal subsidiaries. See “Divestitures” below for additional information.

The preliminary allocation of $3,468 million for other intangible assets includes $2,279 million for customer relationships with a weighted average amortization period of 15 years, $610 million for indefinite lived trade names, $319 million for indefinite lived permits, $114 million for finite lived trade names with a weighted average amortization period of 2.9 years, $141 million for ERP software with a weighted average amortization period of 4.7 years and $5 million for developed technology with an amortization period of 17 years.

Divestitures

On January 2, 2025, we completed the sale of our WM Healthcare Solutions’ Spain and Portugal subsidiaries. As the fair value of consideration transferred was equal to the carrying value of the divested subsidiaries, no gain or loss was recognized.