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Acquisitions | 9 Months Ended
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Dec. 31, 2011
Acquisitions |
11. | Acquisitions
Novozymes Biopharma Sweden AB On December 20, 2011, the Company acquired the Novozymes Biopharma Business from Novozymes, for total consideration transferred of $28,495,000. The terms of the transaction required that the payment be denominated in Euros, but it is reflected here in U.S. dollars for presentation purposes. The Novozymes Acquisition diversifies and expands Repligen’s bioprocessing product offering and customer base while doubling the Company’s manufacturing capacity. The terms of the acquisition included an upfront payment of $26,884,000 and future potential milestone payments totaling up to €4,000,000, if specific sales targets are met for certain products by various dates ending on December 31, 2014 and upon the transfer of manufacturing processes for certain products. This business will operate as the Company’s newly-formed, wholly-owned subsidiary, Repligen Sweden AB. The €4,000,000 contingent consideration had an initial probability-weighted fair value at acquisition of $1,611,000. Consideration Transferred The Company accounted for the Novozymes Acquisition as the purchase of a business under GAAP. Under the acquisition method of accounting, the assets of the Novozymes Biopharma Business were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net assets acquired was approximately $28,922,000, which exceeds the total consideration transferred of $28,495,000. Accordingly, the Company recognized the excess of the fair value of the net assets over the purchase price of approximately $427,000 as a gain on bargain purchase that is shown separately within income from operations in the consolidated statements of operations. The Company believes that it was able to acquire the Novozymes Biopharma Business for less than the fair value of its assets because of (i) the Company’s unique position as a market leader in this industry segment and (ii) the seller’s intent to exit this industry segment, which was only a small part of the seller’s overall business and no longer fit its strategy. The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates. The total consideration transferred follows:
Cash consideration |  | $ | 26,884,000 |
Estimated fair value of contingent consideration |  |  | 1,611,000 |
Total consideration transferred |  | $ | 28,495,000 |
The fair value of contingent consideration was determined based upon a probability weighted analysis of expected future milestone payments to be made to the seller. The Company could make payments of up to€ 4,000,000 if specific sales targets are met for certain products by various dates ending on December 31, 2014 and upon the transfer of manufacturing processes for certain products. The liability for contingent consideration is included in current and long-term liabilities on the consolidated balance sheets and will be remeasured at each reporting period until the contingency is resolved. Acquisition related costs are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. The Company incurred approximately $1.7 million in transaction costs related to the Novozymes Acquisition. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations. Fair Value of Net Assets Acquired The following chart summarizes the allocation of the fair value of assets acquired and liabilities assumed:
Accounts receivable |  | $ | 5,088,000 |
Inventory |  |  | 10,497,000 |
Prepaid expenses |  |  | 195,000 |
Fixed assets |  |  | 9,089,000 |
Customer relationships and acquired technology |  |  | 6,705,000 |
Deferred tax liability |  |  | (89,000 | )
Accounts payable and other liabilities assumed |  |  | (2,563,000 | )
Net assets acquired |  | $ | 28,922,000 |
Less total consideration transferred |  |  | (28,495,000 | )
Gain on bargain purchase |  | $ | 427,000 |
The purchase price allocation is preliminary as a result of the fact that the Company has not yet received a final valuation report for the assets acquired and liabilities assumed. Adjustments to the allocation of fair value to the assets acquired and liabilities assumed could occur until such time as the final valuation report has been received. Revenue, Net Loss and Pro Forma Presentation Repligen Sweden AB recorded revenue of $4,000 and net income of $282,000 in the period from December 21, 2011 through December 31, 2011. The Company has included the operating results of Repligen Sweden AB in its consolidated statements of operations since the December 20, 2011 acquisition date. The following table presents unaudited supplemental pro forma information as if the Novozymes Acquisition had occurred as of the first day of each period, April 1, 2011 and April 1, 2010, respectively.
|  | Nine Months ended December 31, |
|  | 2011 |  |  | 2010 |
Total revenue |  | $ | 36,516,279 |  |  | $ | 32,330,882 |
Net loss |  |  | (5,987,923 | ) |  |  | (2,083,490 | )
This unaudited pro forma financial information is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as being representative of the future consolidated results of operations of the Company. BioFlash Partners, LLC On January 29, 2010, the Company acquired the assets of BioFlash Partners, LLC (“BioFlash”), including a technology platform for the production of pre-packed, “plug and play” chromatography columns for total consideration transferred of $2.6 million. This patented technology enables economical production of chromatography columns in a format that is ready for use in the production of a broad range of biopharmaceuticals, including monoclonal antibodies, vaccines and recombinant proteins. The terms of the acquisition included an upfront payment of $1.8 million, a milestone payment of $300,000 payable the earlier of (i) the date on which Repligen receives an acknowledgment executed by a specific customer or (ii) the second anniversary of the acquisition date, and future royalties based on product sales. The milestone payment was made to BioFlash in November 2010. The Company will manufacture and sell these pre-packed columns under the brand name OPUS. OPUS pre-packed chromatography columns have the potential to improve manufacturing efficiencies by reducing time for column packing, set-up and cleaning. Consideration Transferred The Company accounted for the acquisition of the assets of BioFlash as the purchase of a business under GAAP. Under the acquisition method of accounting, the assets of BioFlash were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The purchase price was based upon estimates of the fair value of assets acquired. The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates. The Company incurred transaction costs of $90,707 associated with the acquisition of the assets of BioFlash. The total consideration transferred follows:
Cash consideration |  | $ | 1,780,000 |
Liability for additional payment |  |  | 300,000 |
Estimated fair value of contingent consideration |  |  | 560,000 |
Total consideration transferred |  | $ | 2,640,000 |
The fair value of contingent consideration was determined based upon a probability weighted analysis of expected future royalty payments (and the fair value of a time-based additional payment) to be made to former shareholders of BioFlash. The liability for contingent consideration is included in current and long-term liabilities on the consolidated balance sheets and will be remeasured at each reporting period until the contingency is resolved. Allocation of Consideration Transferred The following chart summarizes the allocation of consideration transferred:
Intangible assets subject to amortization |  | $ | 1,430,000 |
Goodwill |  |  | 994,000 |
Equipment |  |  | 216,000 |
Total |  | $ | 2,640,000 |
The Company believes that the intangible assets were recorded at fair value at the date of acquisition and do not exceed the amount a third party would pay for the assets. The Company used the income approach to determine the fair value of the amortizable intangible assets. Various factors contributed to the establishment of goodwill, including the expected business plans and opportunities to introduce future products to BioFlash’s customer base.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1500-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7000-128479 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6927-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7008-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1490-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6996-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Appendix F -Paragraph F4 -Subparagraph e Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1383-128463 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1392-128463 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1497-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1524-128463 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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