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ACQUISITIONS AND DIVESTITURES | 12 Months Ended
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Dec. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES Fiscal 2023 Acquisition Noveprim Group On November 30, 2023, the Company completed the acquisition of an additional 41% equity interest of Noveprim Group (Noveprim), a leading supplier of non-human primates (NHPs) located in Mauritius, resulting in a 90% controlling interest. The Company had previously acquired a 49% equity interest in 2022 for $90.0 million plus additional contingent payments up to $5.0 million based on future performance. The total consideration allocable to the Noveprim acquisition is $374.8 million, which includes $144.6 million additional cash paid for the 41% equity interest, elimination of historical activity and intercompany balances of $198.8 million which includes a remeasurement gain on the 49% equity investment of $103.2 million, contingent consideration of $33.3 million, deferred purchase price of $12.0 million payable from 2024 through 2027, offset by estimated post-closing adjustments for working capital of $13.8 million. The contingent consideration fair value is estimated using a Monte Carlo Simulation model and the maximum contingent contractual payments are up to $55.0 million based on future performance and milestone achievements from in fiscal years 2023 through 2025. The Company has the call option right to purchase the remaining 10% equity interest up until one month after the sixth anniversary of closing the 41% equity interest. On the first anniversary of the expiration of the call option, a 12-month put option will be triggered giving the seller the right to require the Company to acquire the remaining shares of the seller. The redemption price for the call/put is fixed and ranges from $47.0 million to $54.0 million depending on when exercised. The noncontrolling interest is classified as a redeemable noncontrolling interest in the mezzanine section of the consolidated balance sheet. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers. SAMDI Tech, Inc. On January 27, 2023, the Company acquired SAMDI Tech, Inc., (SAMDI), a leading provider of high-quality, label-free high-throughput screening (HTS) solutions for drug discovery research. The acquisition of SAMDI will provide clients with seamless access to the premier, label-free HTS MS platform and create a comprehensive, library of drug discovery solutions. The purchase price of SAMDI was $62.8 million, net of $0.4 million in cash, inclusive of a 20% strategic equity interest previously owned by the Company of $12.6 million. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. Fiscal 2022 Acquisition Explora BioLabs Holdings, Inc. On April 5, 2022, the Company acquired Explora BioLabs Holdings, Inc. (Explora BioLabs), a provider of contract vivarium research services, providing biopharmaceutical clients with turnkey in vivo vivarium facilities, management and related services to efficiently conduct their early-stage research activities. The acquisition of Explora BioLabs complements the Company’s existing Insourcing Solutions business, specifically the CRADL™ (Charles River Accelerator and Development Lab) footprint, and offers incremental opportunities to partner with an emerging client base, many of which are engaged in cell and gene therapy development. The purchase price of Explora BioLabs was $284.5 million, net of $6.6 million in cash. The acquisition was funded through proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s RMS reportable segment. Fiscal 2021 Acquisitions Vigene Biosciences, Inc. On June 28, 2021, the Company acquired Vigene Biosciences, Inc. (Vigene), a gene therapy CDMO, providing viral vector-based gene delivery solutions. The acquisition enables clients to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner. The purchase price of Vigene was $323.9 million, net of $2.7 million in cash. Included in the purchase price are contingent payments fair valued at $34.5 million, which was estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $57.5 million based on future performance). The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s Manufacturing reportable segment. As of December 30, 2023 and December 31, 2022 the fair value of the contingent consideration was zero as certain financial targets have not and are not expected to be achieved. Retrogenix Limited On March 30, 2021, the Company acquired Retrogenix Limited (Retrogenix), an outsourced discovery services provider specializing in bioanalytical services utilizing its proprietary cell microarray technology. The acquisition of Retrogenix enhances the Company’s scientific expertise with additional large molecule and cell therapy discovery capabilities. The purchase price of Retrogenix was $53.9 million, net of $8.5 million in cash. Included in the purchase price are contingent payments fair valued at $6.9 million, which is the maximum potential payout, and was based on a probability-weighted approach. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. Cognate BioServices, Inc. On March 29, 2021, the Company acquired Cognate BioServices, Inc. (Cognate), a cell and gene therapy CDMO offering comprehensive manufacturing solutions for cell therapies, as well as for the production of plasmid DNA and other inputs in the CDMO value chain. The acquisition of Cognate establishes the Company as a scientific partner for cell and gene therapy development, testing, and manufacturing, providing clients with an integrated solution from basic research and discovery through cGMP production. The purchase price of Cognate was $877.9 million, net of $70.5 million in cash and includes $15.7 million of consideration for an approximate 2% ownership interest not initially acquired, but redeemed in April 2022 with the ultimate payout tied to performance in 2021. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility and senior notes (Senior Notes) issued in fiscal 2021. This business is reported as part of the Company’s Manufacturing reportable segment. Distributed Bio, Inc. On December 31, 2020, the Company acquired Distributed Bio, Inc. (Distributed Bio), a next-generation antibody discovery company with technologies specializing in enhancing the probability of success for delivering high-quality, readily formattable antibody fragments to support antibody and cell and gene therapy candidates to biopharmaceutical clients. The acquisition of Distributed Bio expands the Company’s capabilities with an innovative, large-molecule discovery platform, and creates an integrated, end-to-end platform for therapeutic antibody and cell and gene therapy discovery and development. The purchase price of Distributed Bio was $97.0 million, net of $0.8 million in cash. The total consideration includes $80.8 million cash paid, settlement of $3.0 million in convertible promissory notes previously issued by the Company during prior fiscal years, and $14.1 million of contingent consideration, which was estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $21.0 million based on future performance and milestone achievements over a one-year period). The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. During fiscal year 2022, $7.0 million of contingent consideration was paid as certain operational milestones were achieved. As of December 30, 2023, other financial targets associated with the contingent consideration were not met and the fair value of the remaining contingent consideration is zero. Other Acquisition On March 3, 2021, the Company acquired certain assets from a distributor that supports the Company’s DSA reportable segment. The purchase price was $35.4 million, which includes $19.5 million in cash paid ($5.5 million of which was paid in fiscal 2020), and $15.9 million of contingent consideration, which was estimated using a Monte Carlo Simulation model (the maximum contingent contractual payments are up to $17.5 million based on future performance over a three-year period). The fair value of the net assets acquired included $17.3 million of goodwill, $15.2 million attributed to supplier relationships (to be amortized over a 4-year period), and $3.0 million of property, plant, and equipment. The business is reported as part of the Company’s DSA reportable segment. As of December 30, 2023, the fair value of the contingent consideration was zero as certain operational targets were not achieved. Purchase price information The purchase price allocation for acquisitions during fiscal years 2023 and 2022 was as follows:
| Noveprim Group(1) |  | SAMDI Tech, Inc. |  | Explora BioLabs
| November 30, 2023 |  | January 27, 2023 |  | April 5, 2022
| (in thousands)
Trade receivables | $ | 1,308 |  |  | $ | 513 |  |  | $ | 7,679 |
Inventories | 66,500 |  |  | — |  |  | — |
Other current assets (excluding cash) | 3,965 |  |  | 75 |  |  | 1,067 |
Property, plant and equipment | 35,831 |  |  | 593 |  |  | 37,369 |
Operating lease right-of-use asset, net | 104 |  |  | — |  |  | 48,613 |
Goodwill (2) | 172,349 |  |  | 37,129 |  |  | 215,752 |
Definite-lived intangible assets | 9,500 |  |  | 33,070 |  |  | 70,100 |
Other long-term assets (3) | 167,907 |  |  | 6 |  |  | 556 |
Deferred revenue | — |  |  | (43) |  |  | (3,507) |
Other current liabilities | (16,378) |  |  | (351) |  |  | (15,507) |
Operating lease right-of-use liabilities (Long-term) | (97) |  |  | — |  |  | (57,193) |
Deferred tax liabilities | (12,984) |  |  | (8,191) |  |  | (18,601) |
Other long-term liabilities | (7,797) |  |  | — |  |  | (1,807) |
Redeemable noncontrolling interest (4) | (45,374) |  |  | — |  |  | — |
Total purchase price allocation | $ | 374,834 |  |  | $ | 62,801 |  |  | $ | 284,521 |
(1) Purchase price allocation is preliminary and subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts, obligations, and finalization of any working capital adjustments. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition.
(2) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses or synergies to be realized from acquiring an internal supplier servicing the DSA business and the assembled workforce of the acquirees, thus is not deductible for tax purposes. Explora BioLabs had $5.0 million of goodwill due to a prior asset acquisition that is deductible for tax purposes.
(3) Other long-term assets acquired from the Noveprim acquisition include $167.8 million of biological assets, which will be amortized over an estimated eight year useful life.
(4) Refer to Note 12. Equity and Noncontrolling Interests for further a description of the 10% noncontrolling interest fair value.
The purchase price allocation for acquisitions during fiscal years 2021 was as follows:
| Vigene |  | Retrogenix |  | Cognate |  | Distributed Bio
| June 28, 2021 |  | March 30, 2021 |  | March 29, 2021 |  | December 31, 2020
| (in thousands)
Trade receivables | $ | 3,548 |  |  | $ | 2,266 |  |  | $ | 18,566 |  |  | $ | 2,722 |
Other current assets (excluding cash) | 1,657 |  |  | 209 |  |  | 14,128 |  |  | 221 |
Property, plant and equipment | 7,649 |  |  | 400 |  |  | 52,082 |  |  | 2,382 |
Operating lease right-of-use asset, net | 22,507 |  |  | 1,385 |  |  | 34,349 |  |  | 1,586 |
Goodwill (1) | 239,681 |  |  | 34,489 |  |  | 611,555 |  |  | 71,585 |
Definite-lived intangible assets | 93,900 |  |  | 22,126 |  |  | 270,900 |  |  | 24,540 |
Other long-term assets | 694 |  |  | — |  |  | 6,098 |  |  | 469 |
Deferred revenue | (4,260) |  |  | (434) |  |  | (20,539) |  |  | (1,319) |
Other current liabilities (2) | (6,319) |  |  | (1,141) |  |  | (45,388) |  |  | (1,504) |
Operating lease right-of-use liabilities (Long-term) | (21,220) |  |  | (1,205) |  |  | (31,383) |  |  | (1,123) |
Deferred tax liabilities | (13,958) |  |  | (4,174) |  |  | (32,503) |  |  | (2,529) |
Total purchase price allocation | $ | 323,879 |  |  | $ | 53,921 |  |  | $ | 877,865 |  |  | $ | 97,030 |
(1) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses and the assembled workforce of the acquirees, thus is not deductible for tax purposes.
(2) In connection with its acquisitions of businesses, the Company routinely records liabilities related to indirect state and local taxes for preacquisition periods when such liabilities are estimable and deemed probable. The Company may or may not be indemnified for such indirect tax liabilities under terms of the acquisitions. As these indirect tax contingencies are resolved, actual obligations, and any indemnifications, may differ from the recorded amounts and any differences are reflected in reported results in the period in which these are resolved. Specifically for Cognate, as of March 29, 2021, the Company recorded an estimated liability of $17 million pertaining to indirect state sales taxes. During fiscal year 2022, the Company received a favorable ruling from the applicable state in which the indirect state sales tax liability arose and, accordingly, this liability was reduced in full, resulting in a gain recorded through selling, general and administrative expenses in the period.
The definite-lived intangible assets acquired during fiscal years 2023 and 2022 were as follows:
| Noveprim Group |  | SAMDI Tech, Inc. |  | Explore BioLabs
Definite-Lived Intangible Assets | (in thousands)
Client relationships | $ | — |  |  | $ | 23,400 |  |  | $ | 64,000 |
Other intangible assets | 9,500 |  |  | 9,670 |  |  | 6,100 |
Total definite-lived intangible assets | $ | 9,500 |  |  | $ | 33,070 |  |  | $ | 70,100 |
Weighted Average Amortization Life | (in years)
Client relationships | — |  |  | 15 |  | 13
Other intangible assets | 7 |  | 7 |  | 4
Total definite-lived intangible assets | 7 |  | 12 |  | 12
The definite-lived intangible assets acquired during fiscal years 2021 were as follows:
| Vigene |  | Retrogenix |  | Cognate |  | Distributed Bio
Definite-Lived Intangible Assets | (in thousands)
Client relationships | $ | 87,500 |  |  | $ | 17,340 |  |  | $ | 257,200 |  |  | $ | 16,080 |
Other intangible assets | 6,400 |  |  | 4,786 |  |  | 13,700 |  |  | 8,460 |
Total definite-lived intangible assets | $ | 93,900 |  |  | $ | 22,126 |  |  | $ | 270,900 |  |  | $ | 24,540 |
Weighted Average Amortization Life | (in years)
Client relationships | 12 |  | 13 |  | 13 |  | 9
Other intangible assets | 2 |  | 3 |  | 2 |  | 4
Total definite-lived intangible assets | 11 |  | 11 |  | 13 |  | 7
The transaction and integration costs incurred for fiscal years 2023, 2022 and 2021 were as follows:
| 2023 |  | 2022 |  | 2021
| (in thousands)
Transaction and Integration Costs |  |  |  |  |
Selling, general and administrative expenses | $ | 12,379 |  |  | $ | 8,470 |  |  | $ | 39,099 |
Divestitures The Company routinely evaluates the strategic fit and fundamental performance of its global businesses, divesting operations that do not meet key business criteria. As part of this ongoing assessment, the Company determined that certain capital could be better deployed in other long-term growth opportunities. Avian Vaccine Services On December 20, 2022, the Company sold its Avian Vaccine Services business (Avian) to a private investor group for a purchase price of $167.3 million in cash, subject to certain customary closing adjustments. The Company may also earn up to $30.0 million of contingent payments, which are tied to certain annual results of the Avian business from January 2024 through December 2027. The contingent payments have been fair valued at $10.3 million using a discounted probability weighted model. The Avian business was reported in the Company’s Manufacturing reportable segment. During the fiscal year 2022, the Company recorded a gain on the divestiture of Avian of $123.4 million within Other income (expense) on the Company’s consolidated statements of income. RMS Japan On October 12, 2021, the Company sold its RMS Japan operations to The Jackson Laboratory for a purchase price of $70.9 million, which included $7.9 million in cash, $3.8 million pension over funding, and certain post-closing adjustments. During the three months ended December 25, 2021, the Company recorded a gain on the divestiture of the RMS Japan business of $20.0 million, net of costs to sell, a currency translation adjustment, and other adjustments related to certain ongoing arrangements with the buyer, which was included in Other income (expense), net within the Company’s consolidated statements of income. The RMS Japan business was reported in the Company’s RMS reportable segment. CDMO Sweden On October 12, 2021, the Company sold its gene therapy CDMO site in Sweden to a private investor group for a purchase price of $59.6 million, net of $0.2 million in cash and other post-closing adjustments that may impact the purchase price. Included in the purchase price are contingent payments fair valued at $15.3 million, which were estimated using a probability weighted model (the maximum contingent contractual payments are up to $25.0 million based on future performance), as well as a purchase obligation of approximately $10.0 million between the parties. During fiscal year 2022 the fair value of the contingent payments receivable was reduced from $15.3 million to $7.5 million, which was the balance as of December 30, 2023, as certain financial targets are not expected to be achieved. CDMO Sweden was acquired in March 2021 as part of the acquisition of Cognate and was reported in the Company’s Manufacturing reportable segment. The carrying amounts of the major classes of assets and liabilities associated with these divestitures were as follows:
| December 19, 2022 |  | October 12, 2021
| Avian |  | RMS Japan |  | CDMO Sweden
| (in thousands)
Assets |  |  |  |  |
Current assets | $ | 30,545 |  |  | $ | 26,524 |  |  | $ | 8,187 |
Property, plant, and equipment, net | 24,602 |  |  | 17,379 |  |  | 14,339 |
Operating lease right-of-use assets, net | 611 |  |  | — |  |  | 19,733 |
Goodwill | 3,168 |  |  | 4,129 |  |  | 27,764 |
Client relationships, net | 1,629 |  |  | — |  |  | 14,089 |
Other assets | 10 |  |  | 3,695 |  |  | — |
Total assets | $ | 60,565 |  |  | $ | 51,727 |  |  | $ | 84,112 |
Liabilities |  |  |  |  |
Current liabilities | $ | 8,139 |  |  | $ | 8,705 |  |  | $ | 6,386 |
Operating lease right-of-use liabilities | 331 |  |  | — |  |  | 18,221 |
Long-term liabilities | — |  |  | 94 |  |  | — |
Total liabilities | $ | 8,470 |  |  | $ | 8,799 |  |  | $ | 24,607 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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