Acquisition of Totalgaz

9 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisition of Totalgaz

Note 15 — Acquisition of Totalgaz

On May 29, 2015 (the “Acquisition Date”), UGI, through its wholly owned indirect subsidiary, UGI France, completed the acquisition of all of the outstanding shares of Totalgaz, a retail distributor of LPG in France, for €453.0 ($497.8) in cash (the “Totalgaz Acquisition”), including €30.0 ($33.0) for estimated Acquisition Date working capital. The Acquisition Date cash consideration is subject to adjustment primarily based upon the final Acquisition Date working capital. The Totalgaz Acquisition was consummated pursuant to the terms of a Share Purchase Agreement dated November 11, 2014, between Total Marketing Services, a subsidiary of global energy company Total, and UGI France. The Totalgaz Acquisition nearly doubles UGI’s retail LPG distribution business in France and is consistent with our growth strategies, one of which is to grow our core business through acquisitions. The Totalgaz Acquisition was funded from existing cash balances and a portion of loan proceeds from UGI France’s May 29, 2015, issuance of a €600 term loan under its 2015 Senior Facilities Agreement (see Note 8). From and after the Acquisition Date, the Totalgaz business is referred to herein as Finagaz.

The Company has accounted for the Totalgaz Acquisition using the acquisition method. The preliminary allocation of the purchase price is based upon estimates of the fair values of the assets acquired and liabilities assumed, using information currently available. The Company expects to obtain additional information during the measurement period under GAAP of up to one year from the Acquisition Date as necessary to determine the final allocation of the purchase price to the assets acquired and liabilities assumed, including tax assets and liabilities and related tax attributes. Accordingly, the fair value estimates presented below are subject to change. The components of the preliminary purchase price allocation are as follows:

Assets acquired:
Cash	$	86.8
Accounts receivable (a)	170.3
Prepaid expenses and other current assets	11.7
Property, plant and equipment	375.3
Intangible assets (b)	98.0
Other assets	30.9
Total assets acquired	$	773.0
Liabilities assumed:
Accounts payable	109.2
Other current liabilities	103.4
Deferred income taxes	120.3
Other noncurrent liabilities	109.4
Total liabilities assumed	$	442.3
Goodwill	167.1
Net consideration transferred	$	497.8

(a) Approximates the gross contractual amounts of receivables acquired.

(b) Represents $86.0 of customer relationships and $12.0 of tradenames, which have preliminary average amortization periods of approximately 15 years.

The excess of the purchase price for Totalgaz over the preliminary fair values of the assets acquired and liabilities assumed has been reflected as goodwill, assigned to the Antargaz reportable segment, and results principally from anticipated synergies and value creation resulting from the Company’s combined LPG businesses in France. The goodwill is not deductible for income tax purposes.

The Company recognized $2.7 and $13.7 of direct transaction-related costs associated with the Totalgaz Acquisition during the three and nine months ended June 30, 2015, respectively, which costs are reflected in operating and administrative expenses on the Condensed Consolidated Statements of Income.

Revenues and net income of Finagaz from the Acquisition Date through June 30, 2015 were not material to UGI’s consolidated results of operations.

The following table presents unaudited pro forma revenues, net income attributable to UGI Corporation and earnings per share data for the three and nine months ended June 30, 2015 and 2014 as if the Totalgaz Acquisition had occurred on October 1, 2013. The pro forma net income also reflects the effects of the issuance of the €600 term loan under the 2015 Senior Facilities Agreement and the associated repayment of the term loan outstanding under the 2011 Senior Facilities Agreement as if such transactions had occurred on October 1, 2013. Amounts in the table below exclude the loss associated with the early extinguishment of debt under the 2011 Senior Facilities Agreement (see Note 8):

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Revenues	$	1,204.2	$	1,611.6	$	5,983.0	$	7,512.9
Net income attributable to UGI Corporation	$	16.3	$	17.6	$	348.5	$	397.3
Earnings per common share attributable to UGI Corporation shareholders:
Basic	$	0.09	$	0.10	$	2.01	$	2.30
Diluted	$	0.09	$	0.10	$	1.98	$	2.27

The unaudited pro forma consolidated information reflects Totalgaz’ historical results after giving effect to adjustments directly attributable to the transaction, including depreciation, amortization, interest expense, intercompany eliminations and related income tax effects. The unaudited pro forma consolidated information is not necessarily indicative of the results that would have occurred had the Totalgaz Acquisition occurred on the date indicated nor are they necessarily indicative of future operating results.

In connection with the Totalgaz Acquisition, the Company agreed with the French Competition Authority (the “FCA”) to divest certain assets and investments of Totalgaz and Antargaz no later than 15 months subsequent to the Acquisition Date. Following the closing of the Totalgaz Acquisition, two competitors in the French LPG distribution market challenged the decision of the FCA. The competitors’ request for interim measures suspending the effectiveness of the agreed remedies was denied by the supreme administrative court (conseil d’etat). Proceedings on the merits are continuing. While UGI cannot predict the final outcome of these proceedings at this time, we believe the FCA and the Company have strong defenses to the claims and intend to vigorously defend against them.