ACQUISITIONS

On June 1, 2017, the Company completed the acquisition of The Valspar Corporation (Valspar) at $113 per share in an all cash transaction for a total purchase price of $8.9 billion, net of divestiture proceeds of $431.0 million (Acquisition). On April 11, 2017, the Company and Valspar entered into a definitive agreement with Axalta Coating Systems Ltd. to divest the assets related to Valspar's North American industrial wood coatings business. The divestiture was also completed on June 1, 2017, and is reported as a discontinued operation with no pre-tax gain or loss but includes the tax expense effect of this separate transaction. Proceeds of $431.0 million were received for the divested assets sold. The divestiture resulted in a tax provision of $41.5 million, which reduced basic and diluted net income per common share for the nine months ended September 30, 2017 by $.45 and $.44, respectively. The Acquisition expanded the Company's diversified array of brands and technologies, expanded its global platform and added new capabilities in its packaging and coil businesses. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 for additional information.

The preliminary and final allocation of the fair value of the Acquisition is summarized in the following table. The allocation of the fair value is based on the acquisition method of accounting and third-party valuation appraisals.



(Millions of dollars)
	Preliminary Allocation (as reported at March 31, 2018)			Measurement Period Adjustments			Final Allocation (as reported at June 30, 2018)

Cash	$	129.1		$	—		$	129.1
Accounts receivable	817.5			—			817.5
Inventories	684.4			—			684.4
Indefinite-lived trademarks	775.9			(161.6		)	614.3
Finite-lived intangible assets	5,071.8			(148.9		)	4,922.9
Goodwill	5,654.4			234.4			5,888.8
Property, plant and equipment	841.0			(0.3		)	840.7
All other assets	231.3			3.8			235.1
Accounts payable	(553.2		)	—			(553.2		)
Long-term debt	(1,603.5		)	—			(1,603.5		)
Deferred taxes	(2,015.3		)	99.4			(1,915.9		)
All other liabilities	(1,094.0		)	(26.8		)	(1,120.8		)
Total	$	8,939.4		$	—		$	8,939.4
Total, net of cash	$	8,810.3		$	—		$	8,810.3

Finite-lived intangible assets include customer relationships of $3.2 billion and intellectual property and technology of $1.7 billion, which are being amortized over weighted average amortization periods ranging from 15 to 20 years. The measurement period adjustments for finite-lived intangible assets resulted in a $7.7 million reduction of amortization expense in the second quarter of 2018 that related to prior periods ($5.4 million for the year ended December 31, 2017 and $2.3 million for the three months ended March 31, 2018). Goodwill of $2.0 billion, $1.1 billion, and $2.8 billion was recorded in The Americas Group, Consumer Brands Group, and Performance Coatings Group, respectively, and relates primarily to expected synergies.

The results of operations for Valspar are included in the Company's consolidated financial statements from the date of acquisition. Net income for the three and nine months ended September 30, 2018 included Acquisition-related costs and purchase accounting amortization impacts of $111.7 million and $346.9 million, respectively, and Acquisition-related interest expense of $66.6 million and $204.4 million, respectively. Net income from continuing operations for the three and nine months ended September 30, 2017 included Acquisition-related costs of $192.5 million and $286.5 million, respectively, and Acquisition-related interest expense of $70.8 million and $112.2 million, respectively.

The following pro forma information presents consolidated financial information as if Valspar had been acquired at the beginning of 2016. Pro forma adjustments have been made to exclude Valspar's divested North American industrial wood coatings business results. Interest expense has been adjusted as though total debt related to the Acquisition had been outstanding at January 1, 2016. Amortization of acquired intangibles and fixed asset and inventory step-ups has been adjusted as though the amortization period started January 1, 2016. The unaudited pro forma consolidated financial information does not necessarily reflect the actual results that would have occurred had the Acquisition taken place on January 1, 2016, nor is it meant to be indicative of future results of operations of the combined companies under the ownership and operation of the Company.



(Thousands of dollars except per share data)	Three Months Ended September 30,		Nine Months Ended September 30,
	2017		2017
Net sales	$	4,507,020	$	12,655,349
Net income from continuing operations	370,915		907,069
Net income per common share from continuing operations:
Basic	$	3.99	$	9.78
Diluted	$	3.90	$	9.57