On April 1, 2022, the Company completed its acquisition (the "Acquisition") of 100% of the outstanding equity interest of FIXCO Invest S.A.S. (together with its subsidiaries, "ETANCO") for total purchase consideration of $805.4 million, net of cash acquired. The Acquisition was completed pursuant to the securities purchase agreement dated January 26, 2022, as amended, by and among the Company, Fastco Investment, Fastco Financing, LRLUX and certain other security holders. The purchase price for the Acquisition was paid using cash on hand and borrowings in the amount of $250.0 million under the revolving credit facility and $450.0 million under the term loan facility.

ETANCO is a manufacturer and distributor of fastener and fixing products headquartered in France and its primary product applications directly align with the addressable markets in which the Company operates. The Acquisition allows the Company to enter into new commercial building markets such as façades, waterproofing, safety and solar, as well as grow its share of direct business sales in Europe.

ETANCO’s results of operations were included in the Company's Condensed Consolidated Financial Statements from April 1, 2022 the acquisition date. ETANCO had net sales of $80.3 million and net loss of $2.0 million, for the three and six months ended June 30, 2022, which includes costs related to the amortization of acquired intangible assets, and expenses incurred for integration.

The Acquisition was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations ("ASC 805") which requires, among other things, that assets acquired and liabilities assumed in a business combination be recorded at fair value as of the acquisition date with limited exceptions.

The allocation of the $824.4 million purchase price, including cash, to the fair values of the tangible and intangible assets acquired and liabilities assumed is as follows:


(in thousands)	Amount
Cash and cash equivalents	$	19,010
Trade accounts receivable, net	63,607
Inventory	107,185
Other current assets	4,491
Property and equipment, net	89,695
Operating lease right-of-use assets	5,361
Goodwill	365,591
Intangible assets, net	357,327
Other noncurrent assets	2,881
Total assets	1,015,148
Trade accounts payable	46,457
Accrued liabilities and other current liabilities	22,079
Operating lease liabilities	5,176
Deferred income tax and other long-term liabilities	117,031
Total purchase price	$	824,405

The gross amount of trade receivables acquired was approximately $67.4 million, of which $63.6 million was estimated to be recoverable based on ETANCO's historical trend for collections.

Acquired inventory primarily consists of raw materials and finished goods consisting of building and construction materials products. The Company adjusted acquired finished goods higher by $10.9 million to estimated fair value based on expected selling prices less a reasonable amount for selling efforts. The fair value adjustment is recognized as a component of cost of sales over the inventory’s expected turnover period, and as a result, $9.2 million of the adjustment was recognized during the three and six months ended June 30, 2022.

Acquired property and equipment includes land of $22.3 million, buildings and site improvements of $29.4 million, and machinery, equipment, and software of $35.5 million. The estimated fair value of property and equipment was determined primarily using market and/or or cost approach methodologies. The acquired fair value for buildings and site improvements depreciate on a straight-line basis over the estimated useful lives of the assets for a period of up to sixteen years, machinery, equipment and software will depreciate on an accelerated basis over an estimated useful life of three to ten years. Depreciation expense associated with the acquired property and equipment amounted to $1.4 million for the three and six months ended June 30, 2022.

The excess of the purchase price over the net assets acquired was recognized as goodwill and relates to the value that is expected from the acquired assembled workforce as well as the increased scale and synergies resulting from the integration of both businesses. The goodwill recognized from the Acquisition is not deductible for local income tax purposes. Goodwill has been allocated to components within the ETANCO reporting unit.

The estimated fair value of intangible assets acquired was determined primarily using income approach methodologies. The values allocated to intangible assets and the useful lives were as follows:


(in thousands, except useful lives)	Weighted-average useful life (in years)	Amount
Customer relationships	15	$	248,398
Trade names	Indefinite	93,811
Developed technology	10	11,256
Patents	8	3,862
		$	357,327

The acquired definite-lived intangible assets are being amortized on a straight-line basis over estimated useful lives, which approximates the pattern in which these assets are utilized. The Company recognized $4.2 million, of amortization expense on these assets during the three and six months ended June 30, 2022.

As a result of the increase in fair value of inventory, property and equipment, and intangible assets, deferred tax liabilities of $104.5 million were recognized, primarily due to intangible assets.

During the three and six months ended June 30, 2022, the Company incurred acquisition and integration related expenses of $5.9 million and $12.8 million, respectively, for investment banking, legal, accounting, advisory, and consulting fees. These costs were included in the Company’s income from operations.

The following unaudited pro forma combined financial information presents estimated results as if the Company acquired ETANCO on January 1, 2021. The unaudited pro forma financial information as presented below is for informational purposes only and does not purport to actually represent what the Company’s combined results of operations would have been had the Acquisition occurred on January 1, 2021, or what those results will be for any future periods.

The following unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S. GAAP:


	Three Months Ended June 30,			Six Months Ended June 30,
(in thousands, except per share amounts)		2022			2022

Net sales		$	593,232		$	1,165,986
Net income		$	104,823		$	210,772

Pro forma earnings per common share:
Basic		$	2.43		$	4.88
Diluted		$	2.42		$	4.87

Weighted average shares outstanding:
Basic		43,145			43,162
Diluted		43,240			43,306

1) Acquisition and integration related costs of $5.9 million which were incurred during the three and six months ended June 30, 2022, were adjusted as if such costs were incurred during the twelve months ended December 31, 2021.

2) The $9.2 million of amortization related to the fair value adjustment for inventory and recognized during the three and six months ended June 30, 2022 was adjusted as if incurred during the three months ended March 31, 2021.

3) Net income for ETANCO includes adjustments of $0.4 million to conform ETANCO’s historical financial results prepared under French GAAP to U.S. GAAP for the three and six months ended June 30, 2022. The U.S. GAAP adjustments are primarily related to share-based payments expense on awards that were settled prior to the Acquisition, and costs incurred and capitalized by ETANCO on its historical acquisitions.