Business Combinations (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the finalized amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the consideration transferred to acquire OppenheimerFunds.



$ in millions	Fair Value
ASSETS
Cash and cash equivalents	360.0
Accounts receivable	133.1
Investments	178.4
Prepaid assets	24.8
Other assets	181.2
Property, equipment and software, net	104.1
Intangible assets⁽¹⁾	5,189.0
Goodwill⁽²⁾	1,505.3
Total assets	7,675.9
LIABILITIES
Accrued compensation and benefits	263.9
Accounts payable and accrued expenses⁽²⁾	728.1
Deferred tax liabilities, net	1,088.0
Total liabilities	2,080.0
Total identifiable net assets	5,595.9

Summary of consideration
Cash consideration	35.0
Common stock consideration⁽³⁾	1,453.6
Preferred stock consideration⁽⁴⁾	4,010.5
Other consideration⁽⁵⁾	96.8
Total cash and stock consideration	5,595.9

____________


(1)	Intangible assets are comprised of the following:


•	indefinite-lived intangible asset related to management contracts of $4,907.0 million consists primarily of contracts related to mutual funds.


•	finite-lived intangible asset related to management contracts of $255.0 million consists primarily of contracts related to sub-advised accounts and has an estimated useful life of eight years.


•	acquired trade name asset of $27.0 million has an estimated useful life of six years.

The intangible assets created in the acquisition are not deductible for tax purposes.

(2)

Goodwill is calculated as the difference between the acquisition date fair value of the total consideration transferred and the aggregate values assigned to the assets acquired and liabilities assumed. The goodwill created in the acquisition is not expected to be deductible for tax purposes. The goodwill balance resulted primarily from the opening balance sheet net deferred tax liability. As a result of an accounting matter related to four Master Limited Partnership funds, the company adjusted the initial accounting for the acquisition by recording a liability of an estimated amount of $380.5 million, an adjustment to goodwill of $287.0 million and a deferred tax asset of $93.5 million (for expected future tax benefits) during the first quarter of 2020. See Note 13, "Commitments and Contingencies", for additional details regarding the accounting matter.

(3)

The common shares were fair valued using the company’s market price on closing date and reflects a discount for the common shares issued to MassMutual (75,563,041 shares) with a two-year lock-up period, resulting in a value of approximately $19.195 per share. Common shares issued to OppenheimerFunds employee shareholders (153,574 shares) were valued at the market price on closing date, which was $20.42.


(4)	The preferred shares were fair valued using a discounted cash flow model, resulting in a value of $1,000 per share.

(5)

Other consideration primarily consists of the fair value of the vested portion of replacement employee common share-based awards.

Schedule of Goodwill

The changes in the carrying amount of goodwill from December 31, 2019 to June 30, 2020 are primarily due to the OppenheimerFunds acquisition.



$ in millions	Net Book Value
January 1, 2020	8,509.4
Purchase price adjustments	285.8
Foreign exchange	(176.9	)
June 30, 2020	8,618.3

Schedule of Pro Forma Information

The following pro forma summary presents consolidated information of the company as if the business combination had occurred on January 1, 2019, the earliest period presented herein.



	Three months ended June 30,	Six months ended June 30,
$ in millions	2019	2019
Operating revenues	1,750.9	3,471.7
Net income	89.7	305.8