Business Acquisitions

3 Months Ended

Mar. 31, 2019

Business Acquisition

Effective January 1, 2019, the Company completed its acquisition of the remaining 67.5% equity of LTG. The transaction resulted in the consolidation of Thompsons Limited of Ontario, Canada and related entities as they were jointly owned by the Company and LTG in equal portions.

Total consideration paid by the Company to complete the acquisition of LTG was $323.9 million. The Company paid $169.2 million in cash, which includes preliminary working capital adjustments of $31.5 million, and issued 4.1 million unregistered shares valued at $123.1 million based upon the stock price of the Company.

The purchase price allocation is preliminary, pending completion of the full valuation report and a final working capital adjustment to be agreed upon between the Company and the sellers. A summarized preliminary purchase price allocation is as follows:




Cash consideration paid	$	169,218
Equity consideration	123,146
Purchase price holdback/ other accrued liabilities	31,518
Total purchase price consideration	$	323,882

The preliminary purchase price allocation at January 1, 2019, is as follows:




Cash and cash equivalents	$	21,923
Accounts receivable	320,467
Inventories	456,963
Commodity derivative assets - current	82,595
Other current assets	27,473
Commodity derivative assets - noncurrent	13,576
Goodwill	113,617
Other intangible assets	116,200
Right of use asset	42,972
Equity method investments	28,728
Other assets, net	2,211
Property, plant and equipment, net	173,388
	1,400,113

Short-term debt	218,901
Trade and other payables	303,321
Commodity derivative liabilities - current	29,024
Customer prepayments and deferred revenue	99,530
Accrued expense and other current liabilities	63,263
Other long-term liabilities, including commodity derivative liabilities - noncurrent	3,174
Long-term lease liabilities	25,810
Long-term debt, including current maturities	161,688
Deferred income taxes	15,577
	920,288
Fair value of acquired assets and assumed liabilities	$	479,825

Removal of preexisting ownership interest, including associated cumulative translation adjustment	(159,459		)
Pre-tax loss on derecognition of preexisting ownership interest	3,516
Total purchase price consideration	$	323,882

The goodwill recognized as a result of the LTG acquisition is $113.6 million and is allocated to the Trade Group segment. A portion of the goodwill is expected to be deductible for tax purposes. The goodwill recognized is primarily attributable to the addition of an assembled workforce and complementary assets with greater scale that significantly expands the Company's reach in the agricultural marketplace.

Details of the intangible assets acquired are as follows:



			Estimated useful life
Customer relationships	$	95,200	10 years
Noncompete agreements	21,000		3 years
	$	116,200	8 years	*

*weighted average number of years

Pro Forma Financial Information

The summary pro forma financial information for the periods presented below gives effect to the LTG acquisition as if it had occurred at January 1, 2018.



	Three Months Ended March 31
	2019			2018
Net sales	$	1,974,092		$	1,928,312
Net loss	(10,753		)	(10,396		)

Pro forma net loss was also adjusted to account for the tax effects of the pro forma adjustments noted above using a statutory tax rate of 25%