Business Combinations

9 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

BUSINESS COMBINATION

Acquisition of Shank's Extracts, LLC

On October 4, 2021, the Company acquired 100% of the capital stock of Shank's Extract's, LLC. (“Shank's”), a flavors and extracts processing company, for approximately $100 million in cash and $2.4 million of additional working capital on-hand at the date of acquisition. The acquisition of Shank's diversifies the Company's product offerings and generates new opportunities for its plant-based ingredients platform.

The purchase price allocation for Shank's as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. A portion of the goodwill recorded as part of the acquisition was attributable to the assembled workforce of Shank's. The goodwill and intangibles recognized for the Shank's acquisition are deductible for U.S.

income tax purposes. The transaction was treated as an asset acquisition for U.S. Federal tax purposes, resulting in a step-up of tax basis to fair value. The Company determined the Shank's operations are not material to the Company’s consolidated results. Therefore, pro forma information is not presented.

For the three and nine months ended December 31, 2021, the Company incurred $0.6 million and $2.3 million, respectively, for acquisition-related transaction costs for the purchase of Shank's. The acquisition-related costs were expensed as incurred and recorded in selling, general, and administrative expense on the consolidated statements of income.

In November 2021, the Company acquired the land and buildings utilized by Shank's operations for $13.3 million. The purchase of the land and buildings resulted in the elimination of the $8.5 million operating lease right-of-use asset and lease liability recognized on the acquisition date for Shank's.

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.

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.

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 December 31, 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.

For the three and nine months ended December 31, 2021, the Company incurred $2.3 million and $3.9 million for acquisition-related transaction costs for the purchase of Silva, respectively. The acquisition-related costs were expensed as incurred and recorded in selling, general, and administrative expense on the consolidated statements of income.

The following table summarizes the preliminary purchase price allocation of the assets acquired and liabilities assumed for the Shank's acquisition and final purchase price allocation for the Silva acquisition.

(in thousands of dollars)
	Shank's		Silva
	October 4, 2021		October 1, 2020
Assets
Cash and cash equivalents	$	754	$	8,126
Accounts receivable, net	6,643		17,885
Advances to suppliers, net	—		3,011
Inventory	15,792		33,162
Other current assets	415		833
Property, plant and equipment (net)	11,000		24,437
Operating lease right-of-use assets	8,531		—
Intangibles
Customer relationships	24,000		53,000
Developed technology	4,500		—
Trade names	—		7,800
Non-compete agreements	3,000		—
Goodwill	41,061		46,144
Total assets acquired	115,696		194,398
Liabilities
Accounts payable and accrued expenses	6,159		11,683
Customer advances and deposits	351		—
Accrued compensation	655		3,350
Income taxes payable	—		946
Current portion of operating lease liabilities	8,531		—
Deferred income taxes	—		14,419
Total liabilities assumed	15,696		30,398
Total assets acquired and liabilities assumed	$	100,000	$	164,000