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BUSINESS ACQUISITION | 3 Months Ended
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Mar. 27, 2022
Business Combination and Asset Acquisition [Abstract] |
BUSINESS ACQUISITION | BUSINESS ACQUISITION On September 24, 2021, the Company acquired 100% of the equity of the Kerry Consumer Foods’ meats and meals businesses, collectively known as Pilgrim's Food Masters, for cash of £695.3 million, or $954.1 million, subject to working capital adjustments. The acquisition was funded with the Company’s recent senior notes offering and borrowings under the credit facility. During the first quarter of 2022, a payment of $4.8 million for working capital and net debt adjustments was paid to the sellers bringing the total cash paid to $958.9 million. The acquisition solidifies Pilgrim’s as a leading European food company. The specialty meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to- go products in the U.K. and the Republic of Ireland. The ready meals business is a leading ethnic chilled and frozen ready meals business in the U.K. The acquired operations are included in the Company’s U.K. and Europe reportable segment. To date, transaction costs incurred in conjunction with this acquisition were approximately $19.1 million. These costs were expensed as incurred and are reflected within Selling, general and administrative expense in the Company’s Consolidated Statements of Income. The results of operations of the acquired business since September 24, 2021 are included in the Company’s Condensed Consolidated Statements of Income. Net sales generated and net income generated by the acquired business during the three months ended March 27, 2022 totaled $260.7 million and $1.9 million, respectively. The assets acquired and liabilities assumed in the acquisition were measured at their estimated fair values as of September 24, 2021 as set forth below. The excess of the purchase price over the preliminary fair value of the identified net assets was recorded as goodwill in the Company’s U.K. and Europe reportable segment. The factors contributing to the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition as well as the assembled workforce. Benefits include (1) complementary product offerings, (2) an enhanced footprint in the U.K. and the Republic of Ireland and (3) an enhanced position in the fast-growing plant-based protein, direct-to-consumer and hot food-to-go markets. The goodwill is not expected to be tax deductible for tax purposes. The initial accounting for this business combination is incomplete for certain intangible assets as additional information is necessary to conclude on assumptions used to establish the estimated fair values. The amounts recognized in these financial statements for this business combination thus have been determined only provisionally. We are currently completing fair value assessments with the assistance of third-party valuation specialists. Any adjustments identified in the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively. The cumulative effect of these adjustments will be recorded in the period of change. The preliminary fair values recorded for the assets acquired and liabilities assumed for the acquisition are as follows (in thousands):
| Preliminary
Cash and cash equivalents | $ | 113 |
Trade accounts and other receivables | 7,387 |
Inventories | 60,341 |
Prepaid expenses and other current assets | 1,727 |
Operating lease assets | 14,648 |
Property, plant and equipment | 247,133 |
Identifiable intangible assets | 415,157 |
Other assets | 335 |
Total assets acquired | 746,841 |
Accounts payable | 4,615 |
Other current liabilities | 407 |
Operating lease liabilities | 18,996 |
Deferred tax liabilities | 114,701 |
Other long-term liabilities | 2,612 |
Total liabilities assumed | 141,331 |
Total identifiable net assets | 605,510 |
Goodwill | 353,397 |
Total consideration transferred | $ | 958,907 |

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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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