Acquisitions

3 Months Ended

Nov. 30, 2011

Acquisitions [Abstract]

Acquisitions

Note 13. Acquisitions

NCRA:

On November 29, 2011, the Board of Directors approved a stock transfer agreement, dated as of November 17, 2011, between CHS Inc. (CHS) and GROWMARK, Inc. (Growmark), and a stock transfer agreement, dated as of November 17, 2011, between CHS and MFA Oil Company (MFA). Pursuant to these agreements, CHS will acquire from Growmark and MFA shares of Class A common stock and Class B common stock of NCRA representing approximately 25.571% of NCRA’s outstanding capital stock. CHS owns the remaining approximately 74.429% of NCRA’s outstanding capital stock and accordingly, upon completion of the acquisitions contemplated by these agreements, NCRA will be a wholly owned subsidiary of CHS.

Pursuant to the agreement with Growmark, CHS will acquire stock representing approximately 18.616% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $255.5 million (approximately $48.0 million of which will be paid at each of the first three closings, and $111.4 million of which will be paid at the final closing). In addition, Growmark is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with Growmark, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

Pursuant to the agreement with MFA, CHS will acquire stock representing approximately 6.955% of NCRA’s outstanding capital stock in four separate closings to be held on September 1, 2012, September 1, 2013, September 1, 2014 and September 1, 2015, for an aggregate base purchase price of $95.5 million (approximately $18.0 million of which will be paid at each of the first three closings, and $41.6 million of which will be paid at the final closing). In addition, MFA is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the agreement with MFA, if the average crack spread margin referred to therein over the fiscal year ending on August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

As a result of this transaction, we are no longer including the noncontrolling interests related to NCRA as a component of equity. Instead, we recorded the present value of the future payments to be made to Growmark and MFA as a liability on our Consolidated Balance Sheet as of November 30, 2011. Noncontrolling interests in the amount of $337.1 million was reclassified and an additional adjustment to equity in the amount of $96.7 million was recorded as a result of the transaction. The $105.2 million fair value related to the crack spread contingent payments has also been recorded on our Consolidated Balance Sheet as of November, 30, 2011 and is included in other liabilities. The fair value of the accrued liability was calculated utilizing an average price option model, an adjusted black-scholes pricing model commonly used in the energy industry to value options. Subsequent changes in the fair value of the crack spread contingent payments will be included in cost of goods sold in our Consolidated Statements of Operations. The portion of NCRA earnings attributable to Growmark and MFA for the first quarter of fiscal 2012, prior to the transaction date, have been included in net income attributable to noncontrolling interests. Beginning in the second quarter of fiscal 2012, earnings will not be attributable to the noncontrolling interests and future patronage earned by Growmark and MFA will be included as interest, net in our Consolidated Statements of Operations.

Solbar:

On November 23, 2011, we entered into an agreement and plan of merger to acquire Solbar Industries Ltd., an Israeli company (Solbar).

Subject to the terms and conditions of the merger agreement, at the effective time of the merger, each ordinary share of Solbar issued and outstanding at the effective time would be converted into the right to receive from CHS $4.00 in cash, without interest, which reflects an equity value of approximately $133.0 million. Included in this value is an amount related to Solbar stock options which would be terminated in exchange for a cash payment in an amount per share equal to the difference between the applicable exercise price per share and $4.00.

Provided all conditions set forth in the merger agreement are met, we anticipate that the merger will be consummated in our second quarter of fiscal 2012.

Creston:

In November 2011, we acquired a crushing facility in Creston, Iowa for $32.3 million.