3.Acquisition

On March 11, 2015, the Company completed its acquisition of Penford Corporation (“Penford”), a manufacturer of specialty starches that is headquartered in Centennial, Colorado. Total purchase consideration for Penford was $332 million, which included the extinguishment of $93 million in debt in conjunction with the acquisition. The Company funded the acquisition with proceeds from borrowings under its revolving credit agreement. The results of Penford are included in the Company’s consolidated results from March 11, 2015 forward within the North America operating segment.

The acquisition provides the Company with, among other things, an expanded specialty ingredient product portfolio consisting of potato starch-based offerings. Penford had net sales of $444 million for the fiscal year ended August 31, 2014 and operated six manufacturing facilities in the United States, all of which manufacture specialty starches. With the acquisition, the Company now employs approximately 11,800 people world-wide.

Due to the timing of the completion of the acquisition so late in the Company’s fiscal quarter, a preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. Assets acquired and liabilities assumed in the transaction were generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. The Company is currently in the process of finalizing the valuation of the assets acquired and liabilities assumed, primarily related to the valuation of tangible and identifiable intangible assets acquired. As such, the actual allocation of the final purchase price and the resulting effect on net income may differ from the preliminary amounts included herein. The Company expects to finalize the purchase price allocation during 2015.

Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired, and is not tax deductible for the Company. The preliminary goodwill of $107 million results from synergies and other operational benefits expected to result from the acquisition.

The following table summarizes the preliminary purchase price allocation as of March 11, 2015 for the acquisition of Penford:

(in millions)
Working capital (excluding cash)	$	66
Property, plant and equipment	110
Other assets	9
Identifiable intangible assets	116
Goodwill	107
Non-current liabilities assumed	(76		)
Total preliminary purchase price	$	332

The identifiable intangible assets include items such as customer relationships, proprietary technology and tradenames.

Included in the results from the acquired Penford business was an increase in cost of sales of $3 million relating to the sale of Penford inventory that was adjusted to fair value at the acquisition date in accordance with business combination accounting rules. The Company also recorded a pre-tax restructuring charge of $10 million for estimated employee severance costs. In addition, the Company incurred $4 million of pre-tax acquisition and integration costs for the three months ended March 31, 2015 associated with the Penford transaction.