In October 2018, DSS, a wholly-owned subsidiary of Cott, acquired Mountain Valley, a growing American brand of spring and sparkling bottled water delivered to homes and offices throughout the United States (the “Mountain Valley Acquisition”). The initial purchase price paid by DSS in the Mountain Valley Acquisition was $80.4 million on a debt and cash free basis. The post-closing working capital adjustment was resolved in February 2019 by the payment of $0.4 million by the former owners of Mountain Valley to DSS. The Mountain Valley Acquisition was funded through a combination of incremental borrowings under the Company’s ABL facility and cash on hand.



(in millions of U.S. dollars)
Cash paid to sellers	$	62.5
Cash paid on behalf of sellers for sellers’ transaction expenses	1.8
Cash paid to retire outstanding debt on behalf of sellers	16.1
Working capital settlement	(0.4		)
Total consideration	$	80.0

The Mountain Valley Acquisition supported the Company’s strategy to expand the Company’s existing home and office bottled water category into premium spring, sparkling and flavored water. The Company has accounted for this transaction as a business combination which requires that assets acquired and liabilities assumed be measured at their acquisition date fair values.

The adjusted purchase price of $80.0 million has been allocated to the assets acquired and liabilities assumed based on management’s estimates of their fair values as of the acquisition date. The excess of the adjusted purchase price over the aggregate fair values was recorded as goodwill. Measurement period adjustments recorded during the year ended December 28, 2019 included adjustments to property, plant and equipment and intangible assets based on final valuations of such assets, as well as the assumed customer bottle deposit liability based on a review by management. These measurement period adjustments did not have a material effect on our results of operations in prior periods.

The table below summarizes the originally reported estimated acquisition date fair values, measurement period adjustments recorded and the final purchase price allocation of the assets acquired and liabilities assumed:



(in millions of U.S. dollars)	Originally Reported			Measurement Period Adjustments			Acquired Value
Cash and cash equivalents	$	8.2		$	—		$	8.2
Accounts receivable	4.2			—			4.2
Inventory	2.3			—			2.3
Prepaid expenses and other assets	0.2			—			0.2
Property, plant and equipment	38.5			3.0			41.5
Goodwill	20.5			(4.5		)	16.0
Intangible assets	25.8			2.6			28.4
Accounts payable and accrued liabilities	(19.3		)	(1.5		)	(20.8		)
Total	$	80.4		(0.4		)	80.0

The amount of revenues and net income related to the Mountain Valley Acquisition included in the Company’s Consolidated Statement of Operations for the period from the acquisition date through December 29, 2018 were $10.1 million and $1.2 million, respectively. During the year ended December 29, 2018, the Company incurred $1.0 million of acquisition-related costs associated with the Mountain Valley Acquisition, which are included in acquisition and integration expenses in the Consolidated Statement of Operations for the year ended December 29, 2018.

In March 2018, the Company completed the acquisition of Crystal Rock Holdings, Inc., a direct-to-consumer home and office water, coffee and filtration business serving customers throughout New York and New England (“Crystal Rock”). The transaction was structured as a merger following a cash tender offer for all outstanding shares of Crystal Rock, with Crystal Rock becoming a wholly-owned indirect subsidiary of the Company (the “Crystal Rock Acquisition”). The aggregate consideration paid was $37.7 million and includes the purchase price paid to the Crystal Rock shareholders of $20.7 million, $0.8 million in costs paid on behalf of the sellers for the seller’s transaction costs and $16.2 million of assumed debt and accrued interest obligations of Crystal Rock that was paid by the Company.

The Crystal Rock Acquisition strengthens the Company’s presence in New York and New England. The Company has accounted for this transaction as a business combination which requires that assets acquired and liabilities assumed be measured at their acquisition date fair values.

The purchase price of $21.5 million, net of debt, has been allocated to the assets acquired and liabilities assumed based on management’s estimates of their fair values as of the acquisition date. The excess of the purchase price over the aggregate fair values was recorded as goodwill. The measurement period adjustment recorded during the year ended December 28, 2019 was an adjustment to deferred taxes based on analysis of certain tax positions. This measurement period adjustment did not have a material effect on our results of operations in prior periods.

The table below summarizes the originally reported estimated acquisition date fair values, measurement period adjustment recorded and the final purchase price allocation of the assets acquired and liabilities assumed:



(in millions of U.S. dollars)	Originally Reported			Measurement Period Adjustments			Acquired Value
Cash and cash equivalents	$	1.6		$	—		$	1.6
Accounts receivable	6.4			—			6.4
Inventory	2.2			—			2.2
Prepaid expenses and other current assets	2.2			—			2.2
Property, plant and equipment	8.9			—			8.9
Goodwill	13.7			0.5			14.2
Intangible assets	12.6			—			12.6
Other assets	0.1			—			0.1
Short-term borrowings	(4.1		)	—			(4.1		)
Current maturities of long-term debt	(1.6		)	—			(1.6		)
Accounts payable and accrued liabilities	(6.7		)	—			(6.7		)
Long-term debt	(10.4		)	—			(10.4		)
Deferred tax liabilities	(2.5		)	(0.5		)	(3.0		)
Other long-term liabilities	(0.9		)	—			(0.9		)
Total	$	21.5		$	—		$	21.5

The amount of revenues related to the Crystal Rock Acquisition included in the Company’s Consolidated Statement of Operations for the period from the acquisition date through December 29, 2018 was $42.3 million. During the year ended December 29, 2018, the Company incurred $3.6 million of acquisition-related costs associated with the Crystal Rock Acquisition, which are included in acquisition and integration expenses in the Consolidated Statement of Operations for the year ended December 29, 2018. During the second quarter of 2018, Crystal Rock was integrated within our DSS business, therefore it is impracticable to determine the amount of net income related to the Crystal Rock Acquisition included in the Company’s Statement of Operations for the period from the acquisition date through December 29, 2018.

In our determination of the estimated fair value of intangible assets, we consider, among other factors, the best use of acquired assets, analysis of historical financial performance and estimates of future performance of the acquired business’ products. The estimated fair values of identified intangible assets are calculated considering both market participant assumptions, using an income approach as well as estimates and assumptions provided by Cott management and management of the acquired business. Assumptions include, but are not limited to, expected revenue growth, weighted-average terminal growth rate, risk adjusted discount rate and fair value royalty rate.

The estimated fair value of customer relationships represent future after-tax discounted cash flows that will be derived from sales to existing customers of the acquired business as of the date of acquisition.

The estimated fair value of trademarks and trade names represent the future projected cost savings associated with the premium and brand image obtained as a result of owning the trademark or trade name as opposed to obtaining the benefit of the trademark or trade name through a royalty or rental fee.

The following table sets forth the components of identified intangible assets associated with the Mountain Valley Acquisition and their estimated weighted average useful lives:



(in millions of U.S. dollars)	Estimated Fair Market Value		Weighted Average Estimated Useful Life
Customer relationships	$	10.0	20 years
Trademarks and trade names	18.4		Indefinite
Total	$	28.4

The following table sets forth the components of identified intangible assets associated with the Crystal Rock Acquisition and their estimated weighted average useful lives:



(in millions of U.S. dollars)	Estimated Fair Market Value		Weighted Average Estimated Useful Life
Customer relationships	$	8.4	11 years
Trademarks and trade names	4.2		Indefinite
Total	$	12.6

The principal factor that resulted in recognition of goodwill in the Mountain Valley Acquisition was that the purchase price was based in part on cash flow projections assuming the reduction of administration costs and the integration of acquired customers and products into our operations, which is of greater value than on a standalone basis. The goodwill recognized as part of the Mountain Valley Acquisition was allocated to the Route Based Services reporting segment and is expected to be tax deductible.

The principal factor that resulted in recognition of goodwill in the Crystal Rock Acquisition was that the purchase price was based in part on cash flow projections assuming the reduction of administration costs and the integration of acquired customers and products into our operations, which is of greater value than on a standalone basis. The goodwill recognized as part of the Crystal Rock Acquisition was allocated to the Route Based Services reporting segment, none of which is expected to be tax deductible.