
4.	Acquisitions

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2012:



Animal Hospitals:
Animal Hospital acquisitions, excluding Associate Veterinary Clinics (1981) LTD ("AVC")	24
Acquisitions, merged	(4	)
AVC acquisition	44
Sold, closed or merged	(4	)
Total	60

Laboratories:
Created	2


4.	Acquisitions, continued

Animal Hospital and Laboratory Acquisitions, excluding AVC

The following table summarizes the aggregate consideration for the 24 independent animal hospitals acquired during the nine months ended September 30, 2012, and the preliminary allocation of the acquisition price (in thousands):



Consideration:
Cash	$	51,744
Holdback	1,475
Earnout contingent consideration	934
Fair value of total consideration transferred	$	54,153

Allocation of the Purchase Price:
Tangible assets	$	1,995
Identifiable intangible assets	9,184
Goodwill ⁽¹⁾	42,974
Total	$	54,153

____________________________

⁽¹⁾We expect that $40.0 million of the goodwill recorded for these acquisitions, as of September 30, 2012, will be deductible for income tax purposes.

In addition to the purchase price listed above, are cash payments made for real estate acquired in connection with our purchase of animal hospitals, totaling $1.6 million for the nine months ended September 30, 2012.

AVC

On January 31, 2012, we increased our investment in AVC by approximately CDN $81 million (approximately US $81 million) becoming the sole non-veterinarian shareholder of AVC. At the time of the additional investment, AVC operated 44 animal hospitals in three Canadian provinces, offering services ranging from primary care, to specialty referral services and 24-hour emergency care. This investment and planned additional investments in AVC will facilitate our continued expansion in the Canadian market. At the time of the investment, AVC had annualized revenue of approximately CDN $95 million (approximately US $95 million). Our consolidated financial statements reflect the operating results of AVC since January 31, 2012.


4.	Acquisitions, continued

The following table summarizes the total investment and the preliminary allocation of the investment in AVC (in thousands):



Consideration:
Cash	$	48,819
Cash paid to debt holders	25,915
Fair value of total consideration transferred	$	74,734

Allocation of the Purchase Price:
Tangible assets	$	11,743
Identifiable intangible assets ⁽¹⁾	23,561
Goodwill ⁽²⁾	77,565
Other liabilities assumed	(18,124		)
	94,745
Noncontrolling interest	(8,161		)
Fair value of pre-existing investment in AVC	(11,850		)
Total	$	74,734

____________________________

⁽¹⁾Identifiable intangible assets include customer relationships, trademark and covenants-not-to-compete.

⁽²⁾As of September 30, 2012, we expect that approximately $362,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2012, were approximately $161,000 and $500,000, respectively.

The allocation of the additional investment is preliminary, because certain items have not been completed or finalized, including but not limited to, the valuation of assets, primarily property and equipment.

AVC is reported within our Animal Hospital reportable segment.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.

ThinkPets, Inc ("ThinkPets)

On February 1, 2012, we acquired 100% interest in ThinkPets for $21 million, payable by delivery of 473,389 shares of VCA common stock and $10.5 million in cash. We intend to combine the operations of ThinkPets with our Vetstreet business, which we expect will improve the products and services it offers to clients of both companies. Our consolidated financial statements reflect the operating results of ThinkPets since February 1, 2012.


4.	Acquisitions, continued

The following table summarizes the preliminary purchase price and the preliminary allocation of the investment in ThinkPets (in thousands):



Consideration:
Cash	$	7,468
Issuance of common stock for acquisitions	10,500
Holdback	1,050
Fair value of total consideration transferred	$	19,018

Allocation of the Purchase Price:
Tangible assets	$	2,078
Identifiable intangible assets ⁽¹⁾	7,221
Goodwill ⁽²⁾	11,194
Other liabilities assumed	(1,475		)
Total	$	19,018

____________________________

⁽¹⁾Identifiable intangible assets include customer relationships, contracts and trademark.

⁽²⁾As of September 30, 2012, we expect that approximately $821,000 of the goodwill recorded for this acquisition will be deductible for income tax purposes.

The allocation of the purchase price is preliminary because certain items have not been completed or finalized, including but not limited to, the valuation of assets, including intangible assets, and liabilities.

ThinkPets is reported within our "All Other" category in our segment disclosures combined with our Medical Technology and Vetstreet operating segments.

The pro forma impact on revenue and earnings have not been disclosed as the amounts were immaterial to the financial statements as a whole.