Note 2 - Business Combinations

6 Months Ended

Nov. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. BUSINESS COMBINATIONS

Business combinations completed in fiscal

2016:

Acquisition of Sirona

- On

March

4,

2016,

the Company exercised its warrant and acquired

100%

of the common stock of Sirona Genomics, Inc. (“Sirona”).   The cash paid for the Sirona business was

$15.0

million, of which

$0.6

million was paid prior to fiscal year

2016

for the warrant, and

$14.4

million was paid in the

fourth

quarter of fiscal year

2016.

The purchase agreement included

two

contingent consideration arrangements,

one

for achieving certain revenue targets in each of the next

five

years and the other for achieving a revenue milestone during the next

five

years. The combined potential earn - out for these arrangements is

$45.0

million in cash over the next

five

years. Management estimated that the fair value of the contingent consideration arrangements, as of the acquisition date, was approximately

$20.0

million, which is included in Other long - term liabilities on the Company’s consolidated balance sheet. Including the contingent consideration, the aggregate estimated fair value of the consideration to be paid is approximately

$35.0

million. The fair value of the assets and liabilities acquired was

$40.6

million for identifiable intangible assets (existing technologies),

$14.8

million for goodwill,

$2.1

million for property and equipment,

$1.3

million of cash,

$1.5

million for current liabilities,

$9.7

million for a Promissory Note payable to Immucor, and

$12.5

million for long - term deferred tax liabilities. The goodwill arising from this acquisition is not deductible for tax purposes.

The Company determines contingent consideration liabilities by applying a form of the income approach, based upon the probability - weighted projected payment amounts discounted to present value at a rate appropriate for the risk of achieving the financial performance targets. The key assumptions were the earn - out period payment probabilities, projected revenues, discount rate and the timing of payments. The present value of the expected payments considers the time at which the obligations are expected to be settled and a discount rate that reflects the risk associated with the performance payments. These assumptions are considered to be level

3

inputs by ASC Topic

820,

Fair Value Measurement

(“ASC Topic

820”),

which are not observable in the market.

Acquisition of reference lab

–

On

August

3,

2015,

the Company completed the asset purchase of a U.S. reference lab for a total cash purchase price of

$0.8

million. This acquisition will enable the Company to deliver current Immucor products as a service to customers as well as commercialize newly developed products. The fair values of the acquired assets were

$0.3

million for equipment,

$0.2

million for identifiable intangible assets and

$0.3

million for goodwill. The goodwill is deductible for tax purposes.

Financial Information

The operating results of the acquired businesses have been included in the Company

’s consolidated results of operations since their dates of acquisition.