| Business and Product Line Acquisitions | 7. BUSINESS AND PRODUCT LINE ACQUISITIONS
The consolidated statements of income reflect the results of
operations for business acquisitions since the respective dates of
purchase. All are accounted for using the acquisition method.
Goodwill recognized in the acquisitions discussed above relates
primarily to enhancing the Company’s strategic platform for
the expansion of available product offerings.
On July 1, 2013, the Company acquired the assets of SyrVet
Inc., a veterinary business based in Waukee, Iowa. SyrVet offered a
product line similar to Neogen’s Ideal Instruments line of
veterinary instruments with a strong presence in Mexico and Latin
America. Consideration for the purchase was $10,012,000 in cash and
up to $1,500,000 of a contingent consideration liability, due at
the end of the first year, based on an excess net sales formula.
The Company estimated the contingent consideration liability to be
$930,000, based on forecasted sales. The final purchase price
allocation, based upon the fair value of these assets determined
using the income approach, included accounts receivable of
$747,000, net inventory of $2,195,000, property and equipment of
$556,000, current liabilities of $226,000, contingent consideration
liabilities of $930,000, non-amortizable trademarks of $790,000,
intangible assets of $4,810,000 (with an estimated life of 15
years) and the remainder to goodwill (deductible for tax purposes).
These values are Level 3 fair value measurements. This business has
been relocated to Lexington, Kentucky and integrated with the
Company’s current operations there, reporting within the
Animal Safety segment. In August 2014, the Company paid $689,000 to
the former owner for contingent consideration based upon the level
of achievement of sales targets; the remaining $241,000 of the
accrual was reversed to Other Income.
On November 1, 2013, the Company acquired the assets of Prima
Tech Incorporated, a veterinary instrument company based in
Kenansville, North Carolina. Prima Tech manufactures devices used
by farmers, ranchers, and veterinarians to inject animals, provide
topical applications, and to use for oral administration. Prima
Tech is also a supplier of products used in artificial insemination
in the swine industry. Consideration for the purchase was
$12,068,000 in cash and up to $600,000 of contingent consideration,
due at the end of the first year, based on an excess net sales
formula. The Company estimated the contingent consideration
liability to be $146,000 based on forecasted sales. The final
purchase price allocation, based upon the fair value of these
assets determined using the income approach, included accounts
receivable of $963,000, net inventory of $2,796,000, property and
equipment of $1,653,000, prepaid assets of $8,000, current
liabilities of $1,840,000, contingent consideration liabilities of
$146,000, non-amortizable trademarks of $1,500,000, intangible
assets of $4,400,000 (with an estimated life of 5-15 years) and the
remainder to goodwill (deductible for tax purposes). These values
are Level 3 fair value measurements. This business continues to
operate in its current location and reports within the Animal
Safety segment. In October 2014, the Company paid the former owners
$600,000 and recorded an additional $454,000 for contingent
consideration, charged to Other Expense, based on achievement of
defined sales targets.
On January 2, 2014, the Company acquired all of the stock of
Chem-Tech Ltd., a pest control manufacturing and distribution
business located in Pleasantville, Iowa. Consideration for the
purchase was $17,185,000 in cash and up to $1,000,000 of a
contingent consideration liability, due at the end of the first
year, based on an excess net sales formula. The Company estimated
the contingent consideration liability to be $390,000, based on
forecasted sales. The final purchase price allocation included
accounts receivable of $380,000, net inventory of $4,184,000,
prepaid assets of $100,000, property and equipment of $807,000,
current liabilities of $184,000, contingent consideration
liabilities of $390,000, intangible assets of $8,327,000 (with an
estimated life of 5-25 years) and the remainder to goodwill
(deductible for tax purposes). These values are Level 3 fair value
measurements. This business continues to operate in its current
location and reports within the Animal Safety segment. In February
2015, the Company paid the former owners $474,000 and recorded an
additional $84,000 for contingent consideration, charged to Other
Expense, based upon achievement of sales targets.
On October 1, 2014, the Company acquired all of the stock of
BioLumix, Inc., a manufacturer and marketer of automated systems
for the detection of microbial contaminants located in Ann Arbor,
Michigan. Consideration for the purchase was $4,514,000 in cash.
The preliminary purchase price allocation included accounts
receivable of $499,000, other receivable of $178,000, net inventory
of $421,000, prepaid assets of $48,000, property and equipment of
$159,000, current liabilities of $130,000, long-term liabilities of
$813,000, intangible assets of $2,109,000 (with an estimated life
of 5-15 years) and the remainder to goodwill (non-deductible for
tax purposes). These values are Level 3 fair value measurements.
This business has been relocated to Lansing, Michigan and
integrated with the Company’s operations there, reporting
within the Food Safety segment.
On December 8, 2014, the Company acquired the food safety and
veterinary genomic assets of its Chinese distributor Beijing
Anapure BioScientific Co., Ltd. Consideration for the purchase was
$2,040,000 in cash. The preliminary purchase allocation included
inventory of $525,000, property and equipment of $64,000,
intangible assets of $20,000 (with an estimated life of five years)
and the remainder to goodwill. These are Level 3 fair value
measurements. This business has been integrated into the
Company’s subsidiary in China and reports within the Food
Safety segment.
On June 1, 2015, Neogen acquired the assets of Sterling Test
House, a commercial food testing laboratory based in India.
Consideration for the purchase was $1,118,000 in cash. The purchase
price allocation included accounts receivable of $43,000, net
inventory of $14,000, property and equipment of $141,000 and the
remainder to goodwill and other intangible assets. These are Level
3 fair value measurements. This business will continue to operate
in its current location and reports within the Animal Safety
segment.
On August 26, 2015, the Company acquired all of the stock of
Lab M Holdings, a developer, manufacturer and supplier of
microbiological culture media and diagnostic systems located in the
United Kingdom. Consideration for the purchase was $12,436,000 in
cash. The preliminary purchase allocation included cash of
$285,000, accounts receivable of $975,000, net inventory of
$1,169,000, property and equipment of $3,337,000, other current
assets of $596,000, current liabilities of $1,350,000, long-term
deferred tax liability of $784,000, intangible assets of $3,918,000
(with an estimated life of 3-15 years) and the remainder to
goodwill. These are Level 3 fair value measurements. This business
will continue to operate in its current location and reports within
the Food Safety segment. |
