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]  
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 September 30, 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 $ 778 
Cash consideration paid related to Internal Revenue Code Section 338(h)(10) 23 
Total cash consideration 801 
Fair value of settlement of a pre-existing relationship (20)
Total purchase consideration $ 781 
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 $ 9  $ —  $ 9 
Accounts receivable, net 233  2  235 
Inventories 137  (1) 136 
Other current assets 4  —  4 
Property, plant and equipment 179  12  191 
Other non-current assets 74  (11) 63 
Accounts payable (122) —  (122)
Accrued employment costs (8) —  (8)
Other current liabilities (9) —  (9)
Other non-current liabilities (21) (1) (22)
Net identifiable assets acquired 476  1  477 
Goodwill 279  25  304 
Total net assets acquired $ 755  $ 26  $ 781 
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 $ 13  15
Supplier relationships 21  18
Trade names and trademarks 7  15
Total identifiable intangible assets $ 41  17
Intangible assets are classified as Other non-current assets on the Statements of Unaudited Condensed Consolidated Financial Position.