Acquisitions (Notes)

6 Months Ended

Nov. 26, 2016

Business Combinations [Abstract]

Acquisitions

Acquisitions

On October 16, 2016, the Company acquired substantially all of the egg production assets and assumed certain liabilities of Foodonics International, Inc. ("Foodonics") and its related entities doing business as Dixie Egg Company for $68.6 million of cash and $3.0 million of deferred purchase price. The acquired assets include commercial egg production and processing facilities with capacity for 1.6 million laying hens, contract grower arrangements for an additional 1.5 million laying hens, and related feed production, milling and distribution facilities in Georgia, Alabama, and Florida. The Company also acquired Foodonics' interest in American Egg Products, LLC ("AEP") and the Egg-Land's Best franchise with licensing rights for portions of certain markets in Alabama, Florida, and Georgia as well as Puerto Rico, Bahamas and Cuba. The Company now owns 100% of AEP. The operations of the acquisition are included in the accompanying financial statements as of October 16, 2016, the effective date of the transaction.

Pending the finalization of the Company's valuation, the following table presents the preliminary fair values of the assets acquired and liabilities assumed (in thousands):

Inventory	$	7,669
Property, plant and equipment	38,683
Intangible assets	24,000
Liabilities assumed	(2,005		)
Total identifiable net assets	68,347
Goodwill	3,296
Purchase price	71,643
Deferred purchase price	(3,000		)
Cash consideration paid	$	68,643

These fair value measurements were primarily based on significant inputs that are not observable in the markets.  The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, was utilized for certain property, plant and equipment of Foodonics.  The cost to replace given assets reflects the estimated reproduction or replacement cost of the asset, less an allowance for loss in value due to depreciation.  The market approach, which indicates value for a subject asset based on available market pricing for comparable assets, was utilized for inventory and the Egg-Land's Best franchise of Foodonics.  The franchise fees will be amortized over a period of 15 years. Goodwill on business combination recognizes the difference in the fair value of the assets acquired and liabilities assumed, net of the acquisition price. Goodwill associated with the acquisition is tax deductible over a 15 years period.

Pro-forma information, which is usually presented for information purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisition been completed as of an earlier time, was not material to the Company's Condensed Consolidated Financial Statements.