
Note 2.	Acquisitions

The company’s acquisitions have historically been made at prices above the determined fair value of the acquired identifiable net assets, resulting in goodwill, due to expectations of the synergies that will be realized by combining the businesses. These synergies include the elimination of redundant facilities, functions and staffing; use of the company’s existing commercial infrastructure to expand sales of the acquired businesses’ products; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products.

Acquisitions have been accounted for using the purchase method of accounting, and the acquired companies’ results have been included in the accompanying financial statements from their respective dates of acquisition. Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred.

Pending Acquisition

In May 2017, the company entered into a purchase agreement and commenced a tender offer to acquire, within the Laboratory Products and Services segment, all of the issued and outstanding shares of Patheon N.V., a leading global provider of high-quality drug development and delivery solutions to the pharmaceutical and biopharma sectors, for $35.00 per share in cash, or approximately $5.2 billion, plus the assumption of approximately $2.0 billion of net debt. The transaction, which is expected to be completed by the end of 2017, is subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals, and completion of the tender offer. The company expects to finance the purchase price, including the repayment of indebtedness of Patheon, with issuances of debt, including the senior notes issued in July 2017 (Note 14), and up to $2.0 billion from the future issuance of equity. The company is currently evaluating alternatives for future debt and permanent equity financings and the timing of such transactions is subject to market and other conditions. The company also has available, but does not expect to utilize, up to $4.3 billion of financing under a 364-day unsecured committed bridge credit facility (Note 8).

Patheon provides comprehensive, integrated and highly customizable solutions as well as the expertise to help biopharmaceutical companies of all sizes satisfy complex development and manufacturing needs. The acquisition will provide entry into the contract development and manufacturing organization market and add a complementary service to the company's existing portfolio. Patheon's revenues totaled approximately $1.9 billion for the year ended October 31, 2016.

Completed Acquisitions

On March 2, 2017, the company acquired, within the Analytical Instruments segment, Core Informatics, a North America-based provider of cloud-based platforms supporting scientific data management, for a total purchase price of $94 million, net of cash acquired. The acquisition enhanced the company's existing informatics solutions. Revenues of Core Informatics were approximately $10 million in 2016. The purchase price exceeded the fair market value of the identifiable net assets and, accordingly, $63 million was allocated to goodwill, $50 million of which is tax deductible.

On February 14, 2017, the company acquired, within the Life Sciences Solutions segment, Finesse Solutions, Inc., a North America-based developer of scalable control automation systems and software for bioproduction, for a total purchase price of $221 million, net of cash acquired. The acquisition expanded the company's bioproduction offerings. Revenues of Finesse Solutions were approximately $50 million in 2016. The purchase price exceeded the fair market value of the identifiable net assets and, accordingly, $134 million was allocated to goodwill, none of which is tax deductible.

The components of the purchase price and net assets acquired for 2017 acquisitions are as follows:



(In millions)	Core Informatics			Finesse Solutions			Total

Purchase Price
Cash paid	$	94.6		$	223.1		$	317.7
Purchase price payable	9.1			—			9.1
Cash acquired	(10.1		)	(2.1		)	(12.2		)

	$	93.6		$	221.0		$	314.6

Net Assets Acquired
Current assets	$	2.0		$	19.4		$	21.4
Property, plant and equipment	0.2			1.6			1.8
Definite-lived intangible assets:
Customer relationships	6.3			67.7			74.0
Product technology	29.1			32.0			61.1
Tradenames and other	2.7			2.2			4.9
Indefinite-lived intangible assets:
In-process research and development	—			1.6			1.6
Goodwill	62.5			134.4			196.9
Other assets	0.1			0.3			0.4
Liabilities assumed	(9.3		)	(38.2		)	(47.5		)

	$	93.6		$	221.0		$	314.6

The weighted-average amortization periods for definite-lived intangible assets acquired in 2017 are 12 years for customer relationships, 10 years for product technology and 3 years for tradenames and other. The weighted average amortization period for all definite-lived intangible assets acquired in 2017 is 11 years.

During the second quarter of 2017, the company finalized the purchase price allocation for the 2016 acquisition of FEI Company. As a result, the company reduced the preliminary values established for tradenames by $88 million and deferred tax liabilities by $18 million and increased goodwill by $70 million. The effect on the income statement of the change was not material.

Unaudited Pro Forma Information

Had the 2016 acquisitions of FEI Company and Affymetrix, Inc. been completed as of the beginning of 2015, the company’s pro forma results for 2016 would have been as follows:



(In millions except per share amounts)	Three Months Ended July 2, 2016		Six Months Ended July 2, 2016

Revenues	$	4,793.8	$	9,398.8

Net Income	$	509.2	$	886.0

Earnings per Share:
Basic	$	1.29	$	2.24
Diluted	$	1.28	$	2.23

These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated or that may result in the future.

The company’s results would not have been materially different from its pro forma results had the company’s other 2016 or 2017 acquisitions occurred at the beginning of 2015 or 2016, respectively.

Revenues and operating income of the FEI acquisition in the first six months of 2017 were $596 million and $26 million, respectively. Operating results include significant acquisition-related and restructuring costs related to synergy planning.