ÐÇ¿Õ´«Ã½

Quarterly report pursuant to Section 13 or 15(d)

ACQUISITIONS

v3.22.2.2
ACQUISITIONS
 9 Months Ended
Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract] Ìý
ACQUISITIONS
NOTE 3 - ACQUISITIONS
FPT Acquisition
Overview
On November 18, 2021, pursuant to the FPT Acquisition Agreement, we completed the FPT Acquisition, in which we were the acquirer. The FPT Acquisition gives us a competitive advantage in sourcing prime scrap, a key raw material for our steelmaking facilities. We incurred acquisition-related costs, excluding severance costs, of $1 million for the nine months ended SeptemberÌý30, 2022, which was recorded in Selling, general and administrative expenses on the Statements of Unaudited Condensed Consolidated Operations.
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Cash consideration:
Cash consideration pursuant to the FPT Acquisition Agreement $ 778Ìý
Cash consideration paid related to Internal Revenue Code Section 338(h)(10) 23Ìý
Total cash consideration 801Ìý
Fair value of settlement of a pre-existing relationship (20)
Total purchase consideration $ 781Ìý
We made certain elections under Section 338(h)(10) of the Internal Revenue Code with respect to entities acquired in connection with the FPT Acquisition that were finalized during the third quarter of 2022, which changed the final cash consideration.
Valuation Assumption and Purchase Price Allocation
We estimated fair values at November 18, 2021 for the preliminary allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in connection with the FPT Acquisition. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. If we determine any measurement period adjustments are material, we will apply those adjustments, including any related impacts to net income, in the reporting period in which the adjustments are determined. We are in the process of conducting a valuation of the assets acquired and liabilities assumed related to the FPT Acquisition, most notably, deferred taxes and environmental obligations, and the final allocation will be made when completed, including the result of any identified goodwill. Accordingly, the provisional measurements noted below are preliminary and subject to modification in the future.
The preliminary purchase price allocation to assets acquired and liabilities assumed in the FPT Acquisition was:
(In Millions)
Initial Allocation of Consideration Measurement Period Adjustments Updated Allocation
Cash and cash equivalents $ 9Ìý $ —Ìý $ 9Ìý
Accounts receivable, net 233Ìý 2Ìý 235Ìý
Inventories 137Ìý (1) 136Ìý
Other current assets 4Ìý —Ìý 4Ìý
Property, plant and equipment 179Ìý 12Ìý 191Ìý
Other non-current assets 74Ìý (11) 63Ìý
Accounts payable (122) —Ìý (122)
Accrued employment costs (8) —Ìý (8)
Other current liabilities (9) —Ìý (9)
Other non-current liabilities (21) (1) (22)
Net identifiable assets acquired 476Ìý 1Ìý 477Ìý
Goodwill 279Ìý 25Ìý 304Ìý
Total net assets acquired $ 755Ìý $ 26Ìý $ 781Ìý
The goodwill resulting from the FPT Acquisition primarily represents the incremental benefit of providing substantial access to prime scrap for our vertically integrated steelmaking business, as well as any synergistic benefits to be realized from the FPT Acquisition within our Steelmaking segment.
The preliminary purchase price allocated to identifiable intangible assets acquired was:
(In Millions) Weighted Average Life (In Years)
Customer relationships $ 13Ìý 15
Supplier relationships 21Ìý 18
Trade names and trademarks 7Ìý 15
Total identifiable intangible assets $ 41Ìý 17
Intangible assets are classified as Other non-current assets on the Statements of Unaudited Condensed Consolidated Financial Position.