Acquisitions

9 Months Ended

Feb. 26, 2012

Acquisitions [Abstract]

ACQUISITIONS

2. ACQUISITIONS

In the first quarter of fiscal 2011, we acquired the assets of American Pie, LLC (“American Pie”) for $131.0 million in cash, plus assumed liabilities. American Pie is a manufacturer of frozen fruit pies, thaw and serve pies, fruit cobblers, and pie crusts under the Marie Callender’s ^® and Claim Jumper^® trade names, as well as frozen dinners, pot pies, and appetizers under the Claim Jumper^® trade name. Approximately $51.5 million of the purchase price was allocated to goodwill and $61.3 million was allocated to brands, trademarks and other intangibles. The amount allocated to goodwill is deductible for income tax purposes. This business is included in the Consumer Foods segment.

On November 28, 2011, we acquired an additional equity interest in ATFL for $4.9 million in cash, net of cash acquired plus assumed liabilities. ATFL is a publicly traded company in India that markets food and food ingredients to consumers and institutional customers in India. Approximately $132.5 million of the acquisition value was allocated to goodwill and $40.0 million was allocated to trade names. The amount allocated to goodwill is not deductible for income tax purposes. As a result of this investment, we now have a majority interest (approximately 52%) in ATFL, and we have consolidated the financial statements of ATFL beginning in the third quarter of fiscal 2012. Prior to our acquisition of a majority interest in ATFL, we accounted for our noncontrolling interest (approximately 48% of the outstanding common shares) under the equity method. In accordance with the acquisition method of accounting, in the third quarter of fiscal 2012, we remeasured our previously held noncontrolling equity interest in ATFL at fair value and recorded a gain of approximately $58.7 million in selling, general and administrative expenses, which represents the excess of the fair value over the carrying value of our noncontrolling equity interest in ATFL. The fair value of ATFL was determined based upon the closing price of ATFL common shares as the date of the acquisition of this additional investment. This business is included in the Consumer Foods segment for financial statement reporting purposes.

On November 30, 2011, we acquired National Pretzel Company for $301.9 million in cash, net of cash acquired plus assumed liabilities. National Pretzel Company is a private label supplier and branded producer of pretzels and related products. All products are produced at its manufacturing facilities in California and Pennsylvania. Approximately $177.5 million of the purchase price was allocated to goodwill and $68.2 million was allocated to customer relationships and trade names. The amount allocated to goodwill is deductible for tax purposes. This business is included in the Consumer Foods segment.

For each of these acquisitions, the amounts allocated to goodwill were primarily attributable to anticipated synergies, product portfolios, and other intangibles that do not qualify for separate recognition. The fair values of the assets and liabilities related to the majority interest of ATFL and the acquisition of National Pretzel Company are subject to refinement as we complete our analyses relative to the fair values at the respective acquisition dates.

On March 5, 2012, subsequent to the end of our third quarter of fiscal 2012, we acquired Del Monte Canada for approximately $185 million in cash, plus assumed liabilities. The business, which had fiscal 2011 sales of approximately $150 million, will be included in the Consumer Foods segment beginning in the fourth quarter of fiscal 2012.

The pro forma effect of the acquisitions mentioned above was not material.