Business Combinations

3 Months Ended

Jun. 30, 2021

Business Combination Disclosure [Text Block]

BUSINESS COMBINATION

Acquisition of Silva International, Inc.

On October 1, 2020 the Company acquired 100% of the capital stock of Silva International, Inc. (“Silva”), a natural, specialty dehydrated vegetable, fruit, and herb processing company serving global markets, for approximately $164 million in cash and $5.9 million of additional working capital on-hand at the date of acquisition. The acquisition of Silva diversifies the Company's product offerings and generates new opportunities for its plant-based ingredients platform.

The Company continues to employ one of Silva's selling shareholders and as stipulated in the Silva purchase agreement has transferred $6 million to a third-party escrow account that may ultimately be earned by the selling shareholder upon completion of a post-combination service period. Since the compensation agreement for the selling shareholder who remains employed with the Company includes a post-combination service period, the Company has excluded the entire $6 million in the

purchase price to be allocated. The $6 million in escrow is recognized as restricted cash in other noncurrent assets on the consolidated balance sheet at June 30, 2021. The contingent consideration arrangement for the selling shareholder includes a post-combination service requirement and forfeitable payment provisions, therefore under ASC Topic 805, "Business Combinations," must be treated as compensation expense. This expense is being recognized ratably over the requisite service period in selling, general, and administrative expense on the consolidated statements of income.

The following preliminary allocation of the purchase price was based on third-party valuations and assumptions. At June 30, 2021, the Company is finalizing the fair value assigned to income tax related assets and liabilities. The final purchase price allocation is expected to be completed in the second quarter of fiscal year 2022. The following table summarizes the preliminary purchase price allocation of the assets acquired and liabilities assumed on October 1, 2020.


(in thousands of dollars)
Assets
Cash and cash equivalents	$	8,126
Accounts receivable, net	17,885
Advances to suppliers, net	3,011
Inventory	33,162
Other current assets	833
Property, plant and equipment (net)	24,437
Intangibles
Customer relationships	53,000
Trade names	7,800
Goodwill	46,144
Total assets acquired	194,398

Liabilities
Accounts payable and accrued expenses	11,683
Accrued compensation	3,350
Income taxes payable	946
Deferred income taxes	14,419
Total liabilities assumed	30,398

Total assets acquired and liabilities assumed	$	164,000

A portion of the goodwill recorded as part of the acquisition was attributable to the assembled workforce of Silva. The goodwill recognized for the Silva acquisition is not deductible for U.S. income tax purposes. The tax basis of the assets acquired and liabilities assumed did not result in a step-up of tax basis. The Company determined the Silva operations are not material to the Company’s consolidated results. Therefore, pro forma information is not presented.