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Acquisitions | 6 Months Ended
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Jun. 30, 2019
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS 2019 Acquisition Activity During the second quarter of 2019, the Company acquired the remaining 50% interest in an equity method investee located in Canada. The purchase of the additional interest increased the Company's ownership of the investee to 100%, and the acquired entity will be managed under the Frutarom segment. The purchase price for the remaining 50% was approximately $40 million, including cash and an accrual for the amount expected to be paid in contingent consideration. The Company began to consolidate the results of the acquired entity from the date on which it acquired the remaining 50% interest during the second quarter of 2019. Goodwill of approximately $24 million and intangible assets of $15 million were recorded in connection with the acquisition. The purchase price allocation is preliminary and is expected to be completed within the measurement period. During the first quarter of 2019, the Company acquired 70% of a company in Europe and increased its ownership of an Asian company from 49% to 60% after receipt of previously pending regulatory approvals. The two acquired entities, which manufacture flavor products, will be managed under the Frutarom segment. The total purchase price for the acquisitions was $52 million, excluding cash acquired and including $19 million of contingent consideration and deferred payments. The preliminary purchase price allocations have been performed and resulted in goodwill of approximately $56 million and intangible assets of $18 million. The purchase price allocations are preliminary and are expected to be completed within the measurement period. Pro forma information has not been presented as the acquired entities are not material. Frutarom On October 4, 2018, the Company completed its acquisition of 100% of the equity of Frutarom Industries Ltd. (“Frutarom”). Purchase Price Allocation The Company allocated the purchase consideration to the tangible net assets and identifiable intangible assets acquired based on estimated fair values at the acquisition date, and recorded the excess of consideration over the fair values of net assets acquired as goodwill. During the second quarter of 2019, the Company updated the purchase price allocation, principally to reflect updated values for certain entities' fixed assets and to adjust the tax rate on deferred tax liabilities to reflect the rate at which the deferred tax liabilities will reverse. The purchase price allocation is preliminary and subject to change. The Company is currently finalizing the valuation of fixed assets, goodwill and intangible assets (trade names, product formulas, customer relationships and favorable/unfavorable leases and the related estimated useful lives). Additionally, the Company is finalizing the projected combined future tax rate to be applied to the valuation of assets, which could impact the valuation of goodwill and intangible assets. The determination of the fair value of assets and liabilities, including those related to leases, will be finalized as soon as the valuation is completed which is expected to be during the third quarter of 2019. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed as of October 4, 2018:
(IN THOUSANDS) | As reported in the fourth quarter of 2018 |  | Measurement period adjustments |  | As reported in the second quarter of 2019
Cash and cash equivalents | $ | 140,747 |  |  |  |  | $ | 140,747 |
Other current assets | 699,627 |  |  |  |  | 699,627 |
Identifiable intangible assets | 2,690,000 |  |  | $ | (21,700 | ) |  | 2,668,300 |
Other non-current assets | 353,710 |  |  | 58,336 |  |  | 412,046 |
Equity method investments | 25,791 |  |  |  |  | 25,791 |
Current liabilities | (311,325 | ) |  |  |  | (311,325 | )
Debt assumed | (77,037 | ) |  |  |  | (77,037 | )
Other liabilities | (632,488 | ) |  | (71,793 | ) |  | (704,281 | )
Redeemable noncontrolling interest | (97,510 | ) |  | (5,700 | ) |  | (103,210 | )
Noncontrolling interest | (3,700 | ) |  |  |  | (3,700 | )
Goodwill | 4,243,079 |  |  | 40,857 |  |  | 4,283,936 |
Total Purchase Consideration | $ | 7,030,894 |  |  |  |  | $ | 7,030,894 |
The preliminary fair value purchase price allocation of the assets and liabilities acquired in the acquisition of Frutarom as reported in the fourth quarter of 2018 were updated during the six months ended June 30, 2019 primarily due to: (i) a $21.7 million decrease in the fair value of identifiable intangible assets (principally customer relationships and arising from the updated valuations for certain entities' fixed assets), (ii) a $58.3 million increase to property, plant and equipment (related to certain Frutarom entities), included in other non-current assets in the accompanying table, (iii) a $1.5 million increase to the noncurrent portion of earn-outs, (iv) a $70.5 million increase to deferred income tax liabilities and (v) a $5.7 million increase to redeemable noncontrolling interest. The cumulative impact of the adjustment resulted in a $40.9 million increase to goodwill. The measurement period adjustments did not have a material impact on the Company's Statement of Comprehensive Income for the first or second quarters of 2019. The preliminary amounts of the components of intangible assets with finite lives that have been recorded are as follows:
(IN THOUSANDS) | Estimated Amounts |  | Weighted-Average Useful Life
Product formula | $ | 290,000 |  |  | 10 to 12 years
Customer relationships | 2,230,000 |  |  | 18 to 23 years
Trade names | 140,000 |  |  | 23 to 26 years
Favorable/Unfavorable Leases, net | 8,300 |  |  | 5 to 15 years
Total | $ | 2,668,300 |  |  |
Pro forma financial information The following unaudited pro forma financial information presents the combined results of operations of IFF and Frutarom as if the acquisition had been completed as of the beginning of the prior fiscal year, or January 1, 2018. The unaudited pro forma financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2018, nor are they indicative of future results. The unaudited pro forma financial information for the three and six months ended June 30, 2018 included the pre-acquisition results of Frutarom for that period. The unaudited pro forma results were as follows:
(IN THOUSANDS) | Three Months Ended June 30, 2018 |  | Six Months Ended June 30, 2018
Unaudited pro forma net sales | $ | 1,321,321 |  |  | $ | 2,637,054 |
Unaudited pro forma net income attributable to the Company | 102,269 |  |  | 214,889 |
The unaudited pro forma results for all periods presented include adjustments made to account for certain costs and transactions that would have been incurred had the acquisition been completed as of January 1, 2018, including amortization charges for acquired intangibles assets, amortization of inventory step-up, adjustments for depreciation expense for property, plant, and equipment, and adjustments to interest expense. These adjustments are net of any applicable tax impact and were included to arrive at the pro forma results above.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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