| 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 below relates
primarily to enhancing the Company’s strategic platform for
the expansion of available product offerings.
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 final purchase price allocation, based upon the fair value of
these assets and liabilities determined using the income approach,
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
$155,000, long-term liabilities of $780,000, intangible assets of
$2,090,000 (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 was 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 final purchase price allocation, based upon
the fair value of these assets and liabilities determined using the
income approach, included inventory of $525,000, property and
equipment of $64,000, intangible assets of $422,000 (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 was integrated into the Company’s
subsidiary in China and reports within the Food Safety segment.
On June 1, 2015, the Company 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 and
approximately $102,000 of a contingent consideration liability, due
in installments on the first two anniversary dates, based on an
excess sales formula. The final purchase price allocation, based
upon the fair value of these assets and liabilities determined
using the income approach, included accounts receivable of $43,000,
inventory of
$14,000, property and equipment of $141,000, contingent
consideration accrual of $102,000, intangible assets of $345,000
(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
July 2016, the Company paid the former owner $70,000 for contingent
consideration based on the achievement of sales targets, and
reduced the recorded liability by a corresponding amount.
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 final purchase price allocation, based upon the fair
value of these assets and liabilities determined using the income
approach, included cash of $285,000, accounts receivable of
$975,000, inventory of $1,169,000, property and equipment of
$3,337,000, other current assets of $309,000, current liabilities
of $948,000, long-term deferred tax liability of $784,000,
intangible assets of $3,611,000 (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 continues to operate in its current location and reports
within the Food Safety segment.
On December 22, 2015, the Company acquired the rodenticide
assets of Virbac Corporation, the North American affiliate of the
France-based Virbac group, a global animal health company. The
acquired assets include a rodenticide active ingredient that
complements Neogen’s existing active ingredients, and more
than 40 regulatory approvals for a variety of formulations in the
United States, Canada and Mexico. The acquired assets also include
a large retail and OEM customer base. Consideration for the
purchase was $3,525,000 in cash and up to $300,000 of contingent
consideration. The preliminary purchase price allocation included
inventory of $317,000, property and equipment of $60,000,
intangible assets of $2,545,000 (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. The products are
manufactured at the Company’s production facility in
Randolph, Wisconsin and reports within the Animal Safety
segment.
On April 26, 2016, the Company acquired the stock of Deoxi
Biotecnologia Ltda., an animal genomics laboratory located in
Aracatuba, Brazil. Deoxi was a competitor of Neogen’s in the
livestock genomics market and this acquisition is intended to help
accelerate the growth of Neogen’s animal genomics services in
Brazil. Consideration for the purchase was $1,549,000 in cash and
up to $2,552,000 of contingent consideration, due at the end of
each of the first two years, based on an excess net sales formula.
The final purchase price allocation, based upon the fair value of
these assets and liabilities determined using the income approach,
included accounts receivable of $132,000, inventory of $89,000,
other current assets of $9,000, property and equipment of $232,000,
current liabilities of $266,000, contingent consideration
liabilities of $453,000, non-amortizable trademarks of
$193,000,
intangible assets of $350,000 (with an estimated life of 5-10
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
Food Safety segment.
On May 1, 2016, the Company acquired the stock of Preserve
International and its sister company, Tetradyne LLC, manufacturers
and marketers of cleaners, disinfectants and associated products to
the swine, poultry, food processing and dairy markets. Preserve and
Tetradyne have manufacturing locations in Memphis, Tennessee and
Turlock, California. Consideration for the purchase was
$24,086,000 in cash. The preliminary purchase price allocation
included accounts receivable of $1,629,000, inventory of
$1,964,000, other current assets of $269,000, land, property and
equipment of $1,625,000, current liabilities of $868,000, long-term
liabilities of
$660,000, intangible assets of $10,590,000 (with an estimated life
of 5-15 years) and the remainder to goodwill (partially deductible
for tax purposes). These values are Level 3 fair value
measurements. This business continues to operate in its current
locations and reports within the Animal Safety segment.
On December 1, 2016 subsequent to the end of the second
quarter, Neogen acquired the stock of Quat-Chem Ltd., a chemical
company that manufactures biosecurity products, based in Rochdale,
England. Consideration for the purchase was $20,500,000 in cash.
Due to the timing of the transaction, the preliminary purchase
price allocation was not complete at the time of filing.
On December 27, 2016 subsequent to the end of the second
quarter, Neogen completed the acquisition of the stock of Rogama
Industria e Comercio, Ltda., a company that develops and
manufactures rodenticides and insecticides, based near Sao Paulo,
Brazil. Consideration for the purchase was $13 million in cash. Due
to the timing of the transaction, the preliminary purchase price
allocation was not complete at the time of filing. |
