In February 2019, two subsidiaries of which the Company holds a 75% interest, MSC IndustrialSupply, S. de R.L. de C.V. and MSC Import Export LLC (together, “MSC Mexico”), completed the acquisition of certain assets of TAC Insumos Industriales, S. de R.L. de C.V. and certain of its affiliates (together, “TAC”). The portion of the consideration attributable to the Company was $13,911, which included the Company’s portion of a post-closing working capital adjustment in the amount of $2,286 which was paid out to TAC in December 2019.

In July 2021, MSC Mexico acquired additional assets of TAC in conjunction with the acquisition of its outsourcing and logistics businesses. Following this acquisition, the Company retains its 75% interest in MSC Mexico. This acquisition provides the Company with the opportunity to further expand its business throughout North America. The portion of the consideration attributable to the Company is $8,061, which includes cash paid of $6,719 and the fair value of contingent consideration to be paid out of $1,342. Total cash consideration funded by the Company came from available cash resources of $1,969 and a note payable of $4,750. The fair value of the contingent consideration to be paid out represents the present value of the $2,600 contingent consideration as of the acquisition date based on a probability-weighted fair value measurement.

This acquisition was accounted for as a business acquisition pursuant to ASC Topic 805. As required by ASC Topic 805, the Company allocated the consideration to assets and liabilities based on their estimated fair value at the acquisition date. The Company’s acquisition accounting as of August 28, 2021 is preliminary primarily due to the pending final valuation and any additional working capital adjustments to the purchase price. The following table summarizes the amounts of identified assets acquired based on the estimated fair value at the acquisition date:


Accounts receivable	$	180
Identifiable intangibles		2,575
Goodwill		4,753
Property, plant and equipment		553
Total Purchase Price Consideration	$	8,061

Acquired identifiable intangible assets with a fair value of $2,575 consisted of customer relationships of $1,809 with a useful life of nine years and non-compete agreements of $766 with a useful life of three years. The goodwill amount of $4,753 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The primary items that generated the goodwill were the premiums paid by the Company for the right to control the acquisition of certain assets and the benefit from adding a platform to expand the Company’s footprint in Mexico, specifically in high-touch, sticky solutions such as on-site crib management and vendor-managed inventory and with an expertise in PPE. This goodwill will not be amortized and will be included in the Company’s periodic test for impairment at least annually. The goodwill is deductible for income tax purposes.

The fair value of the noncontrolling interest was determined utilizing the market approach and consideration of the overall business enterprise value. The amount of revenue and loss before provision for income taxes from MSC Mexico related to its outsourcing and logistics businesses included in the Company’s Consolidated Statements of Income was insignificant for fiscal year 2021. In addition, the Company incurred non-recurring transaction and integration costs relating to MSC Mexico totaling $659, which are included in the Company’s Consolidated Statement of Income as Operating expenses for fiscal year 2021.

Acquisition of Hurst

In June 2021, the Company acquired 80% of the outstanding shares of privately held Wm. F. Hurst Co., LLC (“Hurst”), a Wichita, Kansas-based distributor of metalworking tools and supplies with deep expertise and customer relationships in the aerospace industry. The portion of the consideration attributable to the Company is $15,301, which includes the Company’s portion of a post-closing working capital adjustment in the amount of $101 that was paid to the sellers of Hurst in August 2021. Total cash consideration funded by the Company came from available cash resources and borrowings under the Amended Revolving Credit Facility (as defined below) (see Note 9, “Debt”).

Hurst serves customers from offices in Wichita, Kansas, Kansas City, Missouri and Dallas, Texas. The acquisition enhances the Company’s leadership position in metalworking and expands its presence in the aerospace industry. The Company plans to provide Hurst’s customer base access to its product portfolio to support their full metalworking and MRO needs.

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Cash	$	20
Inventories		2,431
Accounts receivable		2,958
Prepaid expenses and other current assets		232
Identifiable intangibles		4,800
Goodwill		9,282
Property, plant and equipment		535
Total assets acquired	$	20,258
Accounts payable		772
Accrued liabilities		360
Total liabilities assumed	$	1,132
Net assets acquired	$	19,126
Less: Fair Value of Noncontrolling Interest		(3,825)
Total MSC Industrial Purchase Price Consideration	$	15,301

Acquired identifiable intangible assets with a fair value of $4,800 consisted of customer relationships of $4,400 with a useful life of seven years and a trademark of $400 with a useful life of five years. The goodwill amount of $9,282 represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and noncontrolling interest. The primary items that generated the goodwill were the premiums paid by the Company for the right to control the business acquired and the benefit from adding a highly complementary provider of metalworking tools and supplies with deep expertise and customer relationships in the aerospace industry. This goodwill will not be amortized and will be included in the Company’s periodic test for impairment at least annually. The goodwill is deductible for income tax purposes.

The fair value of the noncontrolling interest was determined utilizing the market approach and consideration of the overall business enterprise value. The amount of revenue and loss before provision for income taxes from Hurst included in the Company’s Consolidated Statements of Income was insignificant for fiscal year 2021. In addition, the Company incurred non-recurring transaction and integration costs relating to Hurst totaling $360, which are included in the Company’s Consolidated Statements of Income as Operating expenses for fiscal year 2021.