BUSINESS ACQUISITIONS

On September 1, 2017, the Company completed the acquisition of Chiltern International Group Limited (Chiltern), a specialty contract research organization, pursuant to a definitive agreement to acquire all of the share capital of Chiltern, in an all-cash transaction valued at approximately $1,224.5. The Company funded the acquisition through a combination of bank financing and the issuance of bonds. Chiltern is part of the Company's CDD segment.

The valuation of acquired assets and assumed liabilities as of September 1, 2017, include the following:



Consideration Transferred
Cash consideration	$	1,224.5



	Initial		Measurement Period Adjustments			Preliminary as of December 31, 2017
Net Assets Acquired
Cash and cash equivalents	$	30.7	$	—		$	30.7
Accounts receivable	116.9		(11.3		)	105.6
Unbilled services	32.6		—			32.6
Prepaid expenses and other	57.9		—			57.9
Property, plant and equipment	12.1		—			12.1
Goodwill	676.6		83.9			760.5
Customer relationships	629.0		(27.0		)	602.0
Trade names and trademarks	24.1		(13.5		)	10.6
Technology	47.0		(21.0		)	26.0
Favorable leases	—		0.9			0.9
Total assets acquired	1,626.9		12.0			1,638.9
Accounts payable	18.1		27.0			45.1
Accrued expenses and other	51.0		(27.6		)	23.4
Unearned revenue	124.2		—			124.2
Deferred income taxes	208.0		12.6			220.6
Other liabilities	1.1		—			1.1
Total liabilities acquired	402.4		12.0			414.4
Net assets acquired	$	1,224.5	$	—		$	1,224.5

The amortization periods for intangible assets acquired are 21 years for customer relationships, 4 years for trade names and trademarks, and 6 years for technology. During the fourth quarter, the Company recorded certain measurement period adjustments to appropriately state the fair value of the net assets acquired from Chiltern. Given the September 1, 2017 closing date of the Chiltern acquisition, these adjustments would have had no material income statement impact had they been recorded as part of the initial purchase price allocation.

The acquisition contributed $188.4 and $11.6 of net revenue and operating income, respectively, during the year ended December 31, 2017.

Unaudited Pro Forma Information

The Company completed the Chiltern acquisition on September 1, 2017. Had the Chiltern acquisition been completed as of January 1, 2016, the Company's pro forma results for 2017 would have been as follows:



	Year Ended
	December 31, 2017		December 31, 2016
Total net revenues	$	10,576.3	$	9,937.4
Operating income	1,377.0		1,327.2
Net income	1,258.3		714.3
Earnings per share:
Basic	$	12.29	$	6.97
Diluted	$	12.11	$	6.85

During the year ended December 31, 2017, the Company also acquired various laboratories and related assets, including Pathology Associates Medical Laboratories (PAML), for approximately $688.8 in cash (net of cash acquired). These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities. The purchase consideration for these acquisitions, including Chiltern, has been allocated to the estimated fair market value of the net assets acquired, including approximately $1,053.0 in identifiable intangible assets (primarily customer relationships and non-compete agreements) and a residual amount of goodwill of approximately $1,009.8.

As a result of the acquisition of PAML, the Company acquired PAML’s ownership interests in six joint ventures. During 2017, the Company further acquired the ownership interests of the other members of two of the six joint ventures, and the Company’s ownership interest in one of the six joint ventures was acquired by the other member. During 2018, the Company intends to acquire the membership interests of the other members of an additional two of these six joint ventures and will continue to evaluate future options for the membership interests in the sixth joint venture. The Company will continue to record minority interests in the consolidated joint ventures for which final transactions have not yet been completed. The purchase consideration for the transaction has been preliminarily allocated to the estimated fair market value of the net assets acquired. The amounts paid in advance for the ownership interest in the three joint ventures are included in other assets on the condensed consolidated balance sheet. The total purchase consideration for the transaction is classified as cash paid for acquisition of a business on the condensed consolidated statement of cash flows.

The purchase price allocation for the Chiltern and PAML acquisitions are still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to intangible assets, goodwill, investment in joint ventures and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. The Company expects these purchase price allocations to be finalized within a year from each acquisition date. Any adjustments will be recorded in the period in which they are identified.

During the year ended December 31, 2016, the Company acquired various laboratories and related assets for approximately$548.6 in cash (net of cash acquired).

The Company completed the acquisition of Sequenom, Inc., a market leader in non-invasive prenatal testing, women's health and reproductive genetics on September 7, 2016, through a cash tender offer for $2.40 per share, or a transaction price of $249.1, net of cash received, and acquired $130.0 of debt. The Sequenom purchase consideration has been allocated to the estimated fair market value of the net assets acquired, including approximately $146.6 in identifiable intangible assets (primarily customer relationships, technology, and trade names) with weighted-average useful lives of approximately 14.6 years; $45.1 in deferred tax liabilities (relating to identifiable intangible assets); and a residual amount of non-tax deductible goodwill of approximately $206.0.

The Company also acquired various other laboratories and related assets for approximately $299.5 in cash (net of cash acquired). The purchase consideration for these acquisitions has been allocated to the estimated fair market value of the net assets acquired, including approximately $126.2 in identifiable intangible assets (primarily customer relationships) and a residual amount of goodwill of approximately $192.3. These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities.

On February 19, 2015, the Company completed its acquisition of Covance Inc. (Covance), a leading drug development services company and a leader in nutritional analysis, for $6,150.7. The Company issued debt and common stock to fund the acquisition of Covance. Covance stockholders received $75.76 in cash and 0.2686 shares of the Company's common stock for each share of Covance common stock they owned. The Company financed the Covance acquisition with $3,900.0 of debt, 15.3 shares of its common stock and $488.2 of available cash, $400.0 of which was derived from a bridge term loan credit facility. On January 30, 2015, the Company issued $2,900.0 in debt securities, consisting of $500.0 aggregate principal amount of 2.625% Senior Notes due 2020, $500.0 aggregate principal amount of 3.20% Senior Notes due 2022, $1,000.0 aggregate principal amount of 3.60% Senior Notes due 2025 and $900.0 aggregate principal amount of 4.70% Senior Notes due 2045. The Company also entered into a $1,000.0 term loan facility which was advanced in full on the February 19, 2015. The term loan credit facility will mature five years after the closing date of the Covance acquisition and may be prepaid without penalty.

Unaudited Pro Forma Information

The Company completed the acquisition of Covance on February 19, 2015. Had the acquisition been completed as of the beginning of 2014, the Company's pro forma results for 2015 would have been as follows:



	Year Ended December 31, 2015
Total revenues	$	9,033.3
Operating income	1,117.2
Net income	547.5
Earnings per share:
Basic	$	5.05
Diluted	$	5.03

During the year ended December 31, 2015, the Company also acquired various other laboratories and related assets for approximately $128.4 in cash (net of cash acquired). These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities. The purchase consideration for these acquisitions has been allocated to the estimated fair market value of the net assets acquired, including approximately $17.4 in identifiable intangible assets (primarily customer relationships and non-compete agreements) and a residual amount of goodwill of approximately $68.4.