Acquisition

On June 1, 2015, the Company acquired an additional 35.7% equity interest in Suzhou Huasu Plastics Co., Ltd. ("Huasu") from INEOS Chlor Vinyls Holdings B.V., increasing its interest in Huasu to 95.0%. Huasu is a polyvinyl chloride ("PVC") joint venture based near Shanghai, People's Republic of China and has a combined annual capacity of 300 million pounds of PVC resin, 145 million pounds of PVC film and sheet and 33 million pounds of building products.

Prior to the acquisition of this 35.7% interest, the Company owned a 59.3% interest in Huasu. The Company accounted for the investment using the equity method of accounting because Huasu did not meet the definition of a variable interest entity and because contractual arrangements giving certain substantive participatory rights to minority shareholders prevented the Company from exercising a controlling financial interest over Huasu. As a result of the Company obtaining control over Huasu, the Company's 59.3% interest was remeasured to fair value, resulting in a loss of $1,505, which is included in other income, net in the consolidated statements of operations.

The closing date purchase price of $5,518 was paid with available cash on hand. The acquisition is being accounted for under the acquisition method of accounting. The transaction resulted in a bargain purchase acquisition-date gain of $22,550 and is recognized in other income, net in the consolidated statements of operations. The Company believes there are several factors that contributed to this transaction resulting in a bargain purchase acquisition-date gain, including the slowdown in the growth of, and current weakness in, the Chinese economy. The assets acquired and liabilities assumed and the results of operations of this acquired business are included in the Vinyls segment. Huasu's net sales and earnings included in the consolidated statements of operations since the acquisition date have not been presented separately as they are not material to the Company's consolidated statements of operations for the three and six months ended June 30, 2015. The acquisition-related costs recognized in the consolidated statements of operations for the three and six months ended June 30, 2015 are not material. The pro forma impact of this business combination has not been presented as it is not material to the Company's consolidated statements of operations for the six months ended June 30, 2015 and 2014.

The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition. The final determination of fair value for certain assets and liabilities will be completed as soon as the information necessary to complete the analysis is obtained. These amounts will be finalized as soon as possible, but no later than one year from the acquisition date.



Fair value of consideration transferred—cash	$	5,518
Preexisting balances between the Company and Huasu, net	(8,538		)
Fair value of the Company's investment in Huasu before the business combination ⁽¹⁾	18,890
Fair value of the noncontrolling interest in Huasu ⁽¹⁾	1,597
	$	17,467

Preliminary allocation of consideration transferred to net assets acquired:
Cash	$	21,300
Working capital, excluding inventory and cash ⁽²⁾	(5,461		)
Inventories	17,717
Property, plant and equipment	19,786
Other assets	7,760
Notes payable to banks	(21,085		)
Total identifiable net assets	40,017
Bargain purchase gain on acquisition	$	22,550

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(1)	The fair values of the Company's 59.3% equity interest and the noncontrolling interest were estimated using internally developed, unobservable inputs (Level 3 inputs in the fair value hierarchy of fair value accounting) based on a cost approach.


(2)	The fair value of accounts receivable acquired is $2,515, with the gross contractual amount being $3,006. The Company expects $491 to be uncollectible.