Business Combinations

6 Months Ended

Jul. 04, 2021

Acquisitions in fiscal year 2021

During the first six months of fiscal year 2021, the Company completed the acquisition of three businesses for aggregate consideration of $860.5 million. The acquired businesses include Oxford Immunotec Global PLC ("Oxford"), a company based in Abingdon, UK with approximately 275 employees, for a total consideration of $590.9 million, Nexcelom Bioscience Holdings, LLC ("Nexcelom"), a company based in Lawrence, Massachusetts with approximately 130 employees, for a total consideration of $267.1 million, and one other business, which was acquired for a total consideration of $2.5 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. Identifiable definite-lived intangible assets, such as core technology, trade names, and customer relationships, acquired as part of these acquisitions had a weighted average amortization period of 11.9 years.

The total purchase price for the acquisitions in fiscal year 2021 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:


	Preliminary
	(In thousands)
Fair value of business combination:
Cash payments	$	859,548
Other liability	910


Less: cash acquired	(157,278)
Total	$	703,180
Identifiable assets acquired and liabilities assumed:
Current assets	$	35,265
Property, plant and equipment	13,293
Other assets	15,187
Identifiable intangible assets:
Core technology	193,260
Trade names	26,070
Patents	150

Customer relationships	104,270

Goodwill	428,923
Deferred taxes	(68,821)


Liabilities assumed	(44,417)
Total	$	703,180

During the second quarter of fiscal year 2021, the Company entered into an agreement to acquire SIRION Biotech GmbH ("Sirion"), a leading, global provider of viral vector-based technologies headquartered in Munich, Germany with approximately 50 employees that drive improved delivery performance for cell and gene therapies. The total consideration is approximately $94.8 million (€80.0 million) in cash and a potential obligation to pay the shareholders of Sirion additional contingent consideration of up to $85.3 million (€72.0 million). The acquisition is expected to close during the third quarter of fiscal year 2021.

Subsequent to July 4, 2021, the Company completed the acquisition of Immunodiagnostic Systems Holdings PLC, a company headquartered in Boldon, the United Kingdom, for a total consideration of approximately $155.0 million (£110.0 million) in cash. The operations for this acquisition will be reported within the results of the Company's Diagnostics segment from the acquisition date.

Subsequent to July 4, 2021, the Company entered into an agreement to acquire BioLegend, Inc. ("BioLegend"), a leading, global provider of life science antibodies and reagents headquartered in San Diego, California with approximately 700 employees, for approximately $5.25 billion in a combination of cash and stock, subject to certain adjustments. The operations for this acquisition will be reported within the results of the Company's Discovery & Analytical Solutions segment from the acquisition date. The acquisition is expected to close by the end of fiscal year 2021, subject to regulatory approvals and other customary closing conditions.

Acquisitions in fiscal year 2020

During the fiscal year 2020, the Company completed the acquisition of four businesses for aggregate consideration of $438.9 million. The acquired businesses were Horizon Discovery Group plc (“Horizon”), a company based in Cambridge, UK with approximately 400 employees, which was acquired on December 23, 2020 for a total consideration of $399.8 million (£296.0 million), and three other businesses, which were acquired for a total consideration of $39.1 million. The excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and in-process research and development, acquired as part of these acquisitions had a weighted average amortization period of 11.0 years.

The total purchase price for the acquisitions in fiscal year 2020 has been allocated to the estimated fair values of assets acquired and liabilities assumed as follows:


	Preliminary
	(In thousands)
Fair value of business combination:
Cash payments	$	437,661
Other liability	1,660

Working capital and other adjustments	(384)
Less: cash acquired	(26,840)
Total	$	412,097
Identifiable assets acquired and liabilities assumed:
Current assets	$	35,532
Property, plant and equipment	20,302
Other assets	18,114
Identifiable intangible assets:
Core technology	65,730
Trade names	5,580


Customer relationships	108,523

Goodwill	221,960
Deferred taxes	(27,142)
Deferred revenue	(2,031)

Liabilities assumed	(45,171)
Total	$	412,097

The preliminary allocations of the purchase prices for acquisitions are based upon initial valuations. The Company's estimates and assumptions underlying the initial valuations are subject to the collection of information necessary to complete its valuations within the measurement periods, which are up to one year from the respective acquisition dates. The primary areas of the preliminary purchase price allocations that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired and liabilities assumed, assets and liabilities related to income taxes and related valuation allowances, and residual goodwill. The Company expects to continue to obtain information to assist in determining the fair values of the net assets acquired at the acquisition dates during the measurement periods. During the measurement periods, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition dates that, if known, would have resulted in the recognition of those assets and liabilities as of those dates. These adjustments will be made in the periods in which the amounts are determined and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition dates. All changes that do not qualify as adjustments made during the measurement periods are also included in current period earnings.

The allocations of the purchase prices for acquisitions are based on estimates of the fair value of the net assets acquired and are subject to adjustment upon finalization of the purchase price allocations. The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed.

As of July 4, 2021, the Company may have to pay contingent consideration related to acquisitions with open contingency periods of up to $7.2 million. As of July 4, 2021, the Company has recorded contingent consideration obligations of $3.3 million, of which $3.2 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. As of January 3, 2021, the Company had recorded contingent consideration obligations with an estimated fair value of $3.0 million, of which $2.9 million was recorded in accrued expenses and other current liabilities, and $0.1 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods does not exceed 1.5 years from July 4, 2021, and the remaining weighted average expected earnout period at July 4, 2021 was 0.8 years. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.

Total acquisition and divestiture-related costs for the three and six months ended July 4, 2021 were $10.6 million and $15.1 million, respectively. These amounts included $6.3 million and $11.7 million of incentive award associated with the Company's acquisition of Meizheng Group for the three and six months ended July 4, 2021, respectively. Net foreign exchange gain and interest expense related to the Company's acquisition of Oxford for the six months ended July 4, 2021 amounted to $5.4 million and $0.2 million, respectively. Total acquisition and divestiture-related costs (gains) for the three and six months ended July 5, 2020 were $(5.2) million and $7.1 million, respectively. These amounts included $(5.6) million and $6.7 million of incentive award associated with the Company's acquisition of Meizheng Group for the three and six months ended July 5, 2020, respectively. These acquisition and divestiture-related costs were expensed as incurred and recorded in selling, general and administrative expenses and interest and other expense, net in the Company's consolidated statements of operations.