On January 31, 2020, the Company acquired all of the stock of Abtek Biologicals Limited, a manufacturer and supplier of culture media supplements and microbiology technologies. This acquisition enhances the Company’s culture media product line offering for the worldwide industrial microbiology markets. Consideration for the purchase was $
1,401,000 in net cash, with $
1,282,000 paid at closing and $
119,000 payable to the former owner on January 31, 2021.
The final purchase
price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included accounts receivable of $
135,000, inventory of $
207,000, machinery and equipment of $
105,000, prepayments of $
6,000, accounts payable of $
118,000, other current liabilities of $
34,000,
non-current
deferred tax liabilities of $
92,000, intangible assets of $
484,000 (with an estimated life of
5-10
years) and the remainder to goodwill
(non-deductible
for tax purposes). These values are Level 3 fair value measurements.
The final $119,000 owed was paid to the former owner in January 2021. This manufacturing operation continues to operate from its current location in Liverpool, England, reporting within the Food Safety segment. It is managed through Neogen’s Scotland operation.
On February 28, 2020, the Company acquired the assets of Cell BioSciences, an Australian distributor of food safety and industrial microbiology products. This acquisition
gives
Neogen a direct sales presence across Australasia for its entire product portfolio. Consideration for the purchase was $
3,768,000 in cash, with $
3,596,000 paid at closing and $
172,000 payable in one year.
The final purchase
price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included inventory of $
420,000, unearned revenue liability of $
13,000, intangible assets of $
1,338,000 (with an estimated life of
3 to
10 years)
and the remainder to goodwill (non-deductible for tax purposes). These values are Level 3 fair value measurements. The final $172,000 owed was paid to the former owner in March 2021. The business operates in Gatton, Australia, reporting within the Australian operations in the Animal Safety segment.
On March 26, 2020, the Company acquired the assets of Chile-based Magiar Chilena, a distributor of food, animal and plant diagnostics, including Neogen products. This acquisition gives Neogen a direct sales presence in Chile. Consideration for the purchase was $
400,000 in cash, with $
350,000 paid at closing and $
50,000 payable to the former owner on
March 26, 2021.
The final purchase
price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included inventory of $
164,000, machinery and equipment of $
53,000, and intangible assets of $
183,000 (with an estimated life of
5-10
years). The business is operated from its current location in Santiago, Chile, reporting within the Food Safety segment. It is managed through Neogen’s Latin America operation.
On July 31, 2020, the Company acquired the U.S. (including territories) rights to Elanco’s StandGuard
Pour-on
for horn fly and lice control in beef cattle, and related assets. This product line fits in well with Neogen’s existing agricultural insecticide portfolio and organizational capabilities. Consideration for the purchase was $
2,351,000 in cash, all paid at closing.
The final purchase
price allocation, based upon the fair value of these assets determined using the income approach, included inventory of $
51,000 and intangible assets of $
2,300,000 (with an estimated life of
15 years). This product line is currently being toll manufactured for the Company but is eventually expected to be manufactured at Neogen’s operation in Iowa; the sales are reported within the Animal Safety segment.
On December 30, 2020, the Company acquired all of the stock of Megazyme, Ltd, an Ireland-based company, and its wholly-owned subsidiaries, U.S.-based Megazyme, Inc. and Ireland-based Megazyme IP. Megazyme is a manufacturer and supplier of diagnostic assay kits and enzymes to measure dietary fiber, complex carbohydrates and enzymes in food and beverages as well as animal feeds. This acquisition will allow Neogen to expand its commercial relationships across food, feed and beverage companies, and provide additional food quality diagnostic products to commercial labs and food science research institutions. Consideration for the purchase was net cash of
$
39.8 million paid at closing, $
8.6 million of cash placed in escrow payable to the former owner in two installments in two and four years,
$
4.9 million of stock issued at closing, and up to $
2.5 million of contingent consideration, payable in two installments over the next year, based upon an excess net sales formula. The preliminary purchase price allocation, based upon the fair value of these assets and liabilities determined using the income approach, included accounts receivable of $
1,376,000, inventory of $
5,595,000, net property, plant and equipment of $
12,599,000, prepayments of $
69,000, accounts payable of $
4,000, other current liabilities of $
1,815,000, contingent consideration accrual of $
2,458,000,
non-current liabilities of $319,000, non-current
deferred tax liabilities of $
3,306,000, intangible assets of $
22,945,000 (with an estimated life of
15-20
years) and the remainder to goodwill
(non-deductible
for tax purposes). These values are Level 3 fair value measurements. In February 2021, the former owner was paid $
1,229,000 for the first installment of contingent consideration, based upon the achievement of sales targets.
The Irish companies continue to operate from their current locations in Bray, Ireland, reporting within the Food Safety segment and are managed through Neogen’s Scotland operation. The U.S. company’s business is managed by our Lansing-based Food Safety team.
For each acquisition listed above, the revenues and net income were not considered material and were therefore not disclosed.
