Business Combinations and Asset Acquisitions

3 Months Ended

Apr. 01, 2023

Business Combination and Asset Acquisition [Abstract]

Business Combination Disclosure [Text Block]

Acquisition of Orscheln Farm and Home, LLC and Related DivestituresOn October 12, 2022, the Company completed its acquisition of Orscheln, which expands the Company's footprint in the Midwest part of the United States. Pursuant to the agreement governing the acquisition, the Company acquired 100% of the equity interest in Orscheln, inclusive of 166 Orscheln stores, the Orscheln corporate headquarters, and the Orscheln distribution

center, for an all-cash purchase price of $397.7 million, exclusive of cash acquired. The acquisition was financed with cash-on-hand and Revolving Credit Facility borrowings under the 2022 Senior Credit Facility (as defined below).

In order to obtain regulatory approval for the Orscheln acquisition, the Federal Trade Commission required the Company to divest of 85 stores, which were sold to two buyers, Bomgaars Supply, Inc. (“Bomgaars”) (73 stores) and Buchheit Enterprises, Inc. (12 stores), on October 12, 2022, concurrently with the closing of the acquisition. Net proceeds from the store divestitures were $69.4 million. In addition, the Company has agreed to sell the Orscheln corporate headquarters and distribution center to Bomgaars for $10 million within 15 months after the closing of the acquisition.

The purchase consideration and preliminary estimated fair value of Orscheln’s net assets acquired on October 12, 2022 are shown below and remain subject to revisions as additional information is obtained about the facts and circumstances that existed at the valuation date. The assets and liabilities of the 85 divested stores, along with the Orscheln corporate headquarters and the Orscheln distribution center, are shown as held for sale in the fair value of assets acquired and liabilities assumed.


(in thousands)	Amounts Recognized as of Acquisition Date		Measurement Period Adjustments		Amounts Recognized as of April 1, 2023
Fair value of assets acquired
Cash and cash equivalents	$	6,935	$	—	$	6,935
Accounts receivable	277		—		277
Inventories	168,663		—		168,663
Prepaid expenses and other current assets	7,222		—		7,222
Property and equipment	13,328		—		13,328
Lease right of use assets	82,755		—		82,755
Deferred income taxes	18,481		—		18,481
Assets held for sale	173,554		—		173,554
Other assets	160		—		160
Less: liabilities assumed
Accounts payable	80,323		—		80,323
Accrued liabilities	20,291		—		20,291
Short-term lease liabilities	5,986		—		5,986
Long-term lease liabilities	70,626		—		70,626
Liabilities held for sale	94,190		—		94,190
Goodwill	197,742		—		197,742
Total fair value of considerations transferred	$	397,700	$	—	$	397,700

The resulting goodwill of $197.7 million is deductible for income tax purposes and represents the expected synergies from combining the operations of Orscheln with Tractor Supply stores and the expanded footprint that Orscheln brings in the Midwest part of the United States.