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Acquisitions

12 Months Ended

Dec. 31, 2021

NOTE 2 – Acquisitions

On April 1, 2021, Ingredion acquired KaTech, a privately held company headquartered in Germany. KaTech provides advanced texture and stabilization solutions to the food and beverage industry. To complete the closing, Ingredion made a total cash payment of $40 million, net of cash acquired, which we funded from cash on hand. The acquisition added $26 million of goodwill and intangible assets, as well as $14 million of tangible assets, which we preliminarily recorded on the acquisition date based on available information and incorporating our best estimates. Beginning at the acquisition date, our Consolidated Financial Statements reflect the effects of the acquisition and KaTech’s financial results, which we report on a one-month lag in our Europe, Middle East and Africa (“EMEA”) reportable business segment.

On November 3, 2020, Ingredion acquired 80 percent of the outstanding shares of Verdient Foods, Inc. (“Verdient”), as well as land and buildings Verdient leased from a third party. Verdient is a Canada-based producer of pulse-based protein concentrates and flours from peas, lentils and fava beans for human food applications. To complete the closing, Ingredion made a total cash payment of CAD $33 million (USD $26 million), which we funded from cash on hand. Before the acquisition, Ingredion owned 20 percent of Verdient’s outstanding shares, which we had reported as an equity method investment until we acquired the remaining shares. The acquisition of Verdient added $15 million of goodwill and $14 million of tangible assets assumed on the acquisition date of November 3, 2020. Beginning on that date, the financial results of Verdient are wholly consolidated into our North America business segment in our Consolidated Financial Statements.

On July 1, 2020, Ingredion acquired a 75 percent controlling interest in PureCircle Limited (“PureCircle”), which is one of the leading producers and innovators of plant-based stevia sweeteners for global food and beverage industries. To complete the closing, Ingredion made a total cash payment of $208 million, net of $14 million of cash acquired, which we funded from cash on hand. Beginning at the acquisition date, we wholly consolidate PureCircle’s financial statements into our Asia-Pacific business segment in our Consolidated Financial Statements and net income attributable to non-controlling interests that is deducted from our net income is the portion of net income attributable to the remaining 25 percent portion of PureCircle owned by non-controlling shareholders.

The following table summarizes the final purchase price allocations for the fair value of the PureCircle net assets at the date of acquisition, which included non-redeemable non-controlling interests for the non-controlling shareholders:


(in millions)		PureCircle
Working capital (excluding cash)	$	68
Property, plant and equipment		91
Other, net		(33)
Identifiable intangible assets		68
Goodwill		88
Total fair value, net of cash		282
Less: Non-redeemable non-controlling interests		74
Total purchase price, net of cash	$	208

The PureCircle acquisition’s identifiable intangible assets include customer relationships, tradenames and proprietary technology. The fair values of these intangible assets under the fair value hierarchy were determined to be Level 3, which include unobservable inputs to determine the fair value of an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for an asset or liability at the measurement date. For more information on the fair value hierarchy, see Note 7.

The following table presents the fair values, valuation techniques and estimated remaining useful lives for PureCircle’s identifiable assets at the acquisition date for these Level 3 measurements (dollars in millions):


				Estimated
Intangible Asset	Fair Value		Valuation Technique	Useful Life
Proprietary technology	$	32	Relief-from-royalty method	12 years
Tradenames		18	Relief-from-royalty method	15 years
Customer relationships		18	Multi-period excess earnings method	12 years

The fair values of proprietary technology, tradenames and customer relationships were determined through the valuation techniques described above using various judgmental assumptions such as discount rates, royalty rates and customer attrition rates, as applicable. The fair values of property, plant and equipment associated with the acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach.

On March 1, 2019, Ingredion completed its acquisition of Western Polymer LLC (“Western Polymer”), a U.S.-based producer of native and modified potato starches for industrial and food applications for $42 million, net of cash acquired. Beginning on the acquisition date, our Consolidated Financial Statements reflect the effects of the acquisition and Western Polymer’s financial results in our North America reportable business segment.

Pro-forma results of operation for any of the foregoing acquisitions have not been presented as the effect of each acquisition individually and in the aggregate with other acquisitions would not be material to Ingredion’s results of operations for any periods presented.

Ingredion incurred $5 million, $11 million and $3 million of pre-tax acquisition and integration costs in 2021, 2020 and 2019, respectively, associated with our acquisitions.