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2. Business Acquisitions
In December 2011, Bunge acquired a tomato products business in its edible oils segment in Brazil for $97 million consisting of $81 million in cash and a $16 million contingent obligation. The preliminary purchase price allocation includes approximately $10 million of inventory, $39 million of finite-lived intangible assets, primarily trademarks, $21 million of property, plant and equipment, $41 million of goodwill, $1 million of current liabilities and $13 million of deferred tax liabilities.
In August 2011, Bunge acquired a North American margarine business in its edible oils segment for a total purchase price of $18 million. The purchase price allocation has been completed resulting in $14 million allocated to property, plant and equipment and $4 million allocated to inventory. Also, in August 2011, Bunge acquired grain elevator operations in its agribusiness segment in North America for a total purchase price of $10 million. The purchase price allocation has been completed resulting in $7 million allocated to property, plant and equipment and $3 million to the fair value of commercial purchase and sale contracts acquired.
In February 2011, Bunge acquired a port facility in its agribusiness segment in Ukraine for a total purchase price of $100 million, net of $2 million cash acquired, consisting of $83 million in cash and $17 million of assumed short-term debt related to assets under construction. The purchase price allocation has been completed resulting in $5 million of current assets, $48 million of property, plant and equipment, $32 million of other finite-lived intangible assets, $34 million of goodwill, $10 million of capital lease obligations, $6 million of deferred tax liabilities and $3 million of other liabilities.
In February 2010, Bunge acquired a 100% interest in five Brazilian sugarcane mills in São Paulo and Minas Gerais states that were formerly part of the Moema Group through the acquisition of Usina Moema Particpacãoes S.A. (Moema Par) and remaining interests in four mills that were not wholly-owned by Moema Par. Bunge collectively refers to the acquired entities as Moema. The purchase consideration for the Moema acquisition was as follows:
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|
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|
|
|
(US$ in millions) |
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|
|
|
Fair value of 10,315,400 Bunge Limited common shares issued |
|
$ |
600 |
|
|
Cash paid |
|
|
52 |
|
| |
|
|
|
|
Total purchase price |
|
$ |
652 |
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| |
|
|
|
Acquisition related expenses of $11 million were included in selling, general and administrative expenses in the consolidated statement of income for the year ended December 31, 2010.
The table below summarizes Bunge's assessment of the fair values of assets and liabilities acquired and resulting determination of goodwill:
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(US$ in millions) |
|
December 31,
2010 |
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Assets acquired: |
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|
|
|
|
Cash |
|
$ |
3 |
|
|
Inventories |
|
|
187 |
|
|
Other current assets |
|
|
69 |
|
|
Property, plant and equipment |
|
|
657 |
|
|
Other intangible assets |
|
|
44 |
|
|
Other non-current assets |
|
|
127 |
|
| |
|
|
|
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Total assets |
|
|
1,087 |
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| |
|
|
|
|
Liabilities acquired: |
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|
|
|
|
Short-term debt |
|
|
378 |
|
|
Other current liabilities |
|
|
286 |
|
|
Long-term debt |
|
|
177 |
|
|
Other non-current liabilities |
|
|
34 |
|
| |
|
|
|
|
Total liabilities |
|
|
875 |
|
| |
|
|
|
|
Goodwill |
|
|
440 |
|
| |
|
|
|
|
Total purchase price |
|
$ |
652 |
|
| |
|
|
|
Other Intangible assets consist of the following:
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|
|
|
|
|
|
|
(US$ in millions) |
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Useful Life |
|
|
|
|
Agricultural partnership agreements |
|
7 years |
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$ |
43 |
|
|
Other |
|
2-20 years |
|
|
1 |
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| |
|
|
|
|
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Total |
|
|
|
$ |
44 |
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| |
|
|
|
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The fair value assigned to intangible assets associated with partnership agreements for the production of sugarcane was determined using the income approach. The fair value of the other intangibles was primarily determined using the market approach. The intangible assets have no expected residual value at the end of their useful lives and are subject to amortization on a straight-line basis. The fair values of tangible assets were derived using a combination of the income approach, the market approach and the cost approach as considered appropriate for the specific assets being valued. None of the acquired assets or liabilities will be measured at fair value on a recurring basis in periods subsequent to the initial recognition.
Moema is a party to a number of claims and lawsuits, primarily civil, labor and environmental claims arising out of the normal course of business. Included in other non-current liabilities is $14 million related to Moema's probable contingencies.
Moema is included in the sugar and bioenergy segment and the goodwill from this acquisition has been assigned to that segment. The acquisition complements Bunge's existing sugarcane milling and trading and merchandising activities and increases Bunge's presence in the sugar and sugarcane-based ethanol industry in Brazil, substantially increasing Bunge's annual sugarcane crushing capacity. The acquired mills form a cluster within a highly productive region for sugarcane in Brazil. The Moema management team's experience in sugarcane agricultural and industrial processes is expected to complement Bunge's expertise in trade and financial risk management. Bunge also expects synergies with its fertilizer business and logistics efficiencies from the acquisition. Goodwill of $489 million is deductible for tax purposes. In addition, the tax deductible goodwill exceeds the recorded goodwill by approximately $95 million resulting in total tax deductible goodwill of approximately $584 million. As a result, a long-term deferred tax asset of $49 million relating to the excess tax deductible goodwill and a corresponding reduction in goodwill were recorded in the purchase price allocation.
Included in the consolidated statement of income for the year ended December 31, 2010 are Moema's net sales and losses from operations before income taxes of $496 million and $22 million, respectively.
In the first quarter of 2010, Bunge acquired the Argentine fertilizer business of Petrobras Energía S.A., a subsidiary of Petroleo Brasileiro S.A. (Petrobras), for $80 million. The acquired business is included in Bunge's fertilizer segment. This acquisition expands Bunge's presence in the Argentine retail fertilizer market, allowing it to further develop synergies with its grain origination operations through the sale of products to farmers from whom it may purchase commodities. Based on the fair values of assets and liabilities acquired, $66 million of the purchase price was allocated to property, plant and equipment, $6 million to other current assets, $7 million to other intangible assets, primarily a non-compete agreement and $1 million to goodwill.
In the third quarter of 2010, Bunge acquired two oilseed processing facilities in its agribusiness segment in Turkey in separate transactions for a total purchase price of $24 million, consisting of $5 million in cash and $19 million of other prepayments related to existing contractual arrangements. The preliminary purchase price allocations for the combined transactions included $20 million allocated to property, plant and equipment and $4 million to goodwill. There were no changes to the purchase price allocation upon finalization in 2011.
In 2010, Bunge acquired the North American rice milling business of Pacific International Rice Mills, LLC (PIRM) in its milling products segment for a total purchase price of $43 million in cash. The 2010 preliminary purchase price allocation included allocations of $17 million to property, plant and equipment, $33 million to current assets and $7 million to current liabilities. Upon finalization of the purchase price allocation in 2011, current assets were reduced by $3 million with $1 million allocated to finite-lived intangibles for brands and trademarks and $2 million allocated to current liabilities.
In the fourth quarter of 2010, Bunge acquired the Hungarian margarine businesses of Royal Brinkers in its edible oil products segment for 5 million Euros in cash which equated to approximately $7 million. The 2010 preliminary purchase price allocation included $2 million of property, plant and equipment, $1 million of other intangible assets and $4 million of goodwill. Upon finalization of the purchase price allocation in 2011, property, plant and equipment was reduced by $1 million which was reallocated to inventory.
In the fourth quarter of 2010, Bunge completed the acquisitions of several grain elevators in its agribusiness segment in the United States in two separate transactions for a total purchase price of $64 million in cash. The preliminary purchase price allocations of the combined transactions included $30 million of property, plant and equipment, $54 million of current assets, $25 million of current liabilities and $5 million of goodwill. Upon completion of the purchase price allocation in 2011, goodwill was reduced by $5 million with $1 million reallocated to current assets, $3 million to property, plant and equipment and a $1 million reduction to current liabilities.
Pro forma financial information is not presented as these acquisitions individually and in aggregate are not material. |