Goodwill |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GOODWILL |
GOODWILL:
The changes in the carrying amount of goodwill are as follows:
As of November 30, 2016, and February 29, 2016, we have accumulated impairment losses associated with goodwill assigned to our Wine and Spirits’ Canadian reporting unit of C$289.1 million, or $215.2 million and $213.5 million, respectively.
Acquisitions –
High West:
In October 2016, we acquired all of the issued and outstanding common and preferred membership interests of High West Holdings, LLC for $136.5 million, net of cash acquired, subject to post-closing adjustments (“High West”). This transaction primarily includes the acquisition of operations, goodwill, trademarks, inventories and property, plant and equipment. This acquisition includes a portfolio of craft whiskeys and other select spirits. The results of operations of High West are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Charles Smith:
In October 2016, we acquired the Charles Smith Wines, LLC business, a collection of five super and ultra-premium wine brands, for $120.8 million (“Charles Smith”). This transaction primarily includes the acquisition of goodwill, trademarks, inventories and certain grape supply contracts. The results of operations of Charles Smith are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Prisoner:
In April 2016, we acquired The Prisoner Wine Company business, consisting primarily of goodwill, inventories, trademarks and certain grape supply contracts, for $284.9 million (“Prisoner”). This transaction primarily includes the acquisition of a portfolio of five super-luxury wine brands. The results of operations of Prisoner are reported in the Wine and Spirits segment and have been included in our results of operations from the date of acquisition.
Ballast Point:
In December 2015, we acquired all of the issued and outstanding common and preferred stock of Home Brew Mart, Inc. d/b/a/ Ballast Point Brewing & Spirits (“Ballast Point”). The following table summarizes the allocation of the estimated fair value for the significant assets acquired:
Goodwill associated with the acquisition is primarily attributable to the future growth opportunities associated with the acquisition of a high-growth premium platform that enables us to compete in the growing craft beer category, further strengthening our position in the high-end U.S. beer market. None of the goodwill recognized is expected to be deductible for income tax purposes. The results of operations of Ballast Point are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.
Meiomi:
In August 2015, we acquired the Meiomi wine business, consisting primarily of goodwill, inventories, the trademark and certain grape supply contracts, for $316.2 million (“Meiomi”). The results of operations of Meiomi are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.
Divestiture –
Canadian Divestiture:
On December 17, 2016, we sold our Canadian wine business, which includes Canadian wine brands such as Jackson-Triggs and Inniskillin, wineries, vineyards, offices, facilities and Wine Rack retail stores, at a transaction value of C$1.04 billion, or $776.2 million, (the “Canadian Divestiture”). We received cash proceeds of C$775.1 million, or $581.2 million, net of outstanding debt of C$260.0 million, or $195.0 million, subject to post-closing adjustments. We expect to recognize a net gain in connection with the Canadian Divestiture for the fourth quarter of fiscal 2017. Our preliminary estimate of this net gain is approximately $255 million.
As previously discussed, in connection with the Canadian Divestiture, we entered into economic hedges to minimize the foreign currency exchange rate risk associated with the expected proceeds from the Canadian Divestiture. As of November 30, 2016, these derivative instruments had a fair value of $3.3 million. At closing, these derivative instruments had a fair value of $4.6 million. In addition, our Wine and Spirits’ U.S. business expects to recognize an impairment of $8.4 million in the fourth quarter of fiscal 2017 for trademarks associated with certain U.S. brands sold exclusively through the Canadian wine business, which we no longer expect to sell subsequent to the Canadian Divestiture.
As of November 30, 2016, in connection with the Canadian Divestiture, we had $165.5 million of net assets held for sale reported within the Wine and Spirits segment. The carrying amounts of the major classes of assets and liabilities classified as held for sale as of November 30, 2016, are presented below. Amounts presented below are included within the respective line on our balance sheet.
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