Quarterly report pursuant to Section 13 or 15(d)

Goodwill

v3.22.4
Goodwill
 9 Months Ended
Nov. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL GOODWILL
The changes in the carrying amount of goodwill are as follows:
Beer Wine and Spirits Consolidated
(in millions)
Balance, February 28, 2021 $ 5,125.6  $ 2,667.9  $ 7,793.5 
Purchase accounting allocations (1)
—  79.6  79.6 
Foreign currency translation adjustments (4.9) (5.8) (10.7)
Balance, February 28, 2022 5,120.7  2,741.7  7,862.4 
Purchase accounting allocations (2)
—  26.3  26.3 
2022 Wine Divestiture —  (24.5) (24.5)
Foreign currency translation adjustments 38.4  (6.0) 32.4 
Balance, November 30, 2022 $ 5,159.1  $ 2,737.5  $ 7,896.6 
(1)Preliminary purchase accounting allocations associated with the acquisition of My Favorite Neighbor and purchase accounting allocations associated with the acquisition of Empathy Wines.
(2)Preliminary purchase accounting allocations associated with the acquisitions of Austin Cocktails and Lingua Franca and purchase accounting allocations associated with the acquisition of My Favorite Neighbor.

Divestiture
2022 Wine Divestiture
On October 6, 2022, we sold certain of our mainstream and premium wine brands and related inventory. The net cash proceeds from the 2022 Wine Divestiture were utilized primarily to reduce outstanding borrowings. Prior to the 2022 Wine Divestiture, we recorded the results of operations of these brands in the Wine and Spirits segment. The following table summarizes the net gain recognized in connection with this divestiture for the nine months and three months ended November 30, 2022:
(in millions)
Cash received from buyer $ 96.7 
Net assets sold (68.1)
Direct costs to sell (1)
(14.8)
Gain on sale of business (2)
$ 13.8 
(1)Includes certain contract termination costs.
(2)Included in selling, general, and administrative expenses within our consolidated results of operations.

Acquisitions
Austin Cocktails
In April 2022, we acquired the remaining 73% ownership interest in Austin Cocktails, which included a portfolio of small batch, RTD cocktails. This transaction primarily included the acquisition of goodwill and a trademark. In addition, the purchase price for Austin Cocktails includes an earn-out over five years based on performance. The results of operations of Austin Cocktails are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

Lingua Franca
In March 2022, we acquired the Lingua Franca business, including a collection of Oregon-based luxury wines, a vineyard, and a production facility. This transaction also includes the acquisition of a trademark and
inventory. In addition, the purchase price for Lingua Franca includes an earn-out over seven years based on performance. The results of operations of Lingua Franca are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

My Favorite Neighbor
In November 2021, we acquired the remaining 65% ownership interest in My Favorite Neighbor, a super-luxury, DTC focused wine business as well as certain wholesale distributed brands. This transaction primarily included the acquisition of goodwill, trademarks, inventory, and property, plant, and equipment. In addition, the My Favorite Neighbor transaction includes an earn-out over 10 years based on performance, with a 50% minimum guarantee due at the end of the earn-out period. The results of operations of My Favorite Neighbor are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

We recognized a gain of $13.5 million for the nine months and three months ended November 30, 2021, related to the remeasurement of our previously held 35% equity interest in My Favorite Neighbor to the acquisition-date fair value. This gain is included in selling, general, and administrative expenses within our consolidated results of operations.