Acquisition

12 Months Ended

Jun. 03, 2023

Acquisition [Abstract]

Acquisition

Note 2 – Acquisition

Effective on May 30, 2021, the Company acquired the remaining

50

% membership interest in Red River Valley Egg Farm, LLC

(“Red River”), including certain liabilities. As a result of the acquisition, Red River became a wholly owned subsidiary of the

Company. Red River owns and operates a specialty shell egg production complex with approximately

1.7

 million cage-free laying

hens, cage-free pullet capacity, feed mill, processing plant, related offices and outbuildings and related equipment located on

approximately

400

 acres near Bogata, Texas.

The following table summarizes the consideration paid for Red River and the amounts of the assets acquired and liabilities

assumed recognized at the acquisition date:

Cash consideration paid

$

48,500

Fair value of the Company's equity interest in Red River held before the business combination

48,500

$

97,000

Recognized amounts of identifiable assets acquired and liabilities assumed

Cash

$

3,677

Accounts receivable, net

1,980

Inventory

8,789

Property, plant and equipment

85,002

Liabilities assumed

(2,448)

Deferred income taxes

(8,481)

Total identifiable net assets

88,519

Goodwill

8,481

$

97,000

Cash and accounts receivable acquired along with liabilities assumed were valued at their carrying value which approximates fair

value due to the short maturity of these instruments.

Inventory consisted primarily of flock, feed ingredients, packaging, and egg inventory. Flock inventory was valued at carrying

value as management believes that their carrying value best approximates their fair value. Feed ingredients, packaging and egg

inventory were all valued based on market prices as of May 30, 2021. 

Property, plant and equipment were valued utilizing the cost approach which is based on replacement or reproduction costs of

the assets and subtracting any depreciation resulting from physical deterioration and/or functional or economic obsolescence.

The Company recognized a gain of $

4.5

 million as a result of remeasuring to fair value its

50

% equity interest in Red River held

before the business combination. The gain was recorded in other income and expense under the heading “Other, net” in the

Company’s Condensed Consolidated Statements of Income. The acquisition of Red River resulted in a discrete tax benefit of $

8.3

million, which includes a $

7.3

 million decrease in deferred income tax expense related to the outside-basis of our equity

investment in Red River, with a corresponding non-recurring, non-cash $

955,000

 reduction to income taxes expense on the non-

taxable remeasurement gain associated with the acquisition. As part of the acquisition accounting, the Company also recorded an

$

8.5

 million deferred tax liability for the difference in the inside-basis of the acquired assets and liabilities assumed. The

recognition of deferred tax liabilities resulted in the recognition of goodwill. None of the goodwill recognized is expected to be

deductible for income tax purposes.