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Acquisitions | 6 Months Ended
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Jul. 02, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions On May 2, 2022, the Company acquired all of the shares of Valley Proteins, pursuant to a stock purchase agreement dated December 28, 2021 (the “Valley Acquisition”). The Valley Acquisition includes a network of 18 major rendering plants and used cooking oil facilities throughout the southern, southeast and mid-Atlantic regions of the U.S. The Company initially paid approximately $1.177 billion in cash for the Valley Acquisition, which is subject to various post-closing adjustments in accordance with the stock purchase agreement. The purchase price was financed by borrowing all of the Company's delayed draw term A-1 facility of $400.0 million and delayed draw term A-2 facility of $500.0 million, with the remainder coming through revolver borrowings under the Company's Amended Credit Agreement. The following table summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed in the Valley Acquisition as of May 2, 2022 (unaudited) (in thousands):
Accounts receivable | $ | 68,558 |
Inventories | 58,246 |
Other current assets | 13,825 |
Property, plant and equipment | 409,405 |
Identifiable intangible assets | 389,200 |
Goodwill | 349,262 |
Operating lease right-of-use assets | 16,380 |
Other assets | 14,164 |
Accounts payable | (47,497) |
Current portion of long-term debt | (2,043) |
Current operating lease liabilities | (4,779) |
Accrued expenses | (62,046) |
Long-term debt, net of current portion | (5,995) |
Long-term operating lease liabilities | (11,601) |
Other noncurrent liabilities | (19,436) |
Purchase price, net of cash acquired | $ | 1,165,643 |
The $349.3 million of goodwill from the Valley Acquisition, arising from synergies expected to strengthen the Company's base business and expand its ability to provide additional carbon intensity feedstocks to fuel the growing demand for renewable diesel, was assigned to the Feed Ingredients segment and is expected to be deductible for tax purposes. The identifiable intangible assets include $292.1 million in routes and $97.1 million in permits with a weighted average life of approximately 15 years. The Company is still assessing the provisional amounts recorded for assets acquired and liabilities assumed including possible future purchase price adjustments related to working capital and tax benefit, thus the final determination of the value of assets acquired and liabilities assumed may result in retrospective adjustments to the values presented in the above table with a corresponding adjustment to goodwill. The amount of revenue and income from the Valley Acquisition included in the Company's consolidated statement of operations for the three and six months ended July 2, 2022 were $164.3 million and $0.5 million, respectively. In addition, the Company incurred acquisition costs related to the Valley Acquisition for the three and six months ended July 2, 2022 of approximately $3.3 million and $4.9 million, respectively. As a result of the Valley Acquisition, effective May 2, 2022, the Company began including the operations of the Valley Acquisition into the Company's consolidated financial statements. The following table presents selected pro forma information, for comparative purposes, assuming the Valley Acquisition had occurred on January 3, 2021 for the periods presented (unaudited) (in thousands):
| Three Months Ended |  | Six Months Ended
| July 2, 2022 |  | July 3, 2021 |  | July 2, 2022 |  | July 3, 2021
Net sales | $ | 1,722,803 |  |  | $ | 1,394,771 |  |  | $ | 3,306,982 |  |  | $ | 2,637,589 |
Net income | 195,533 |  |  | 185,723 |  |  | 358,377 |  |  | 326,795 |
The Company notes that pro forma results of operations for the acquisitions discussed below have not been presented because the effect of each acquisition individually or in the aggregate is not deemed material to revenues, total assets and net income of the Company for any period presented. On February 25, 2022, a wholly-owned international subsidiary of the Company acquired all of the shares of Group Op de Beeck, a Belgium digester, organic and industrial waste processing company, that is now included in our Fuel Ingredients segment, for an initially estimated purchase price of approximately $91.7 million, plus or minus various closing adjustments in accordance with the stock purchase agreement. Initially, the Company paid approximately $71.3 million in cash consideration. In the second quarter of fiscal 2022, the Company paid an additional $4.2 million for purchase price adjustments related to working capital and estimated future construction costs for a total purchase price of approximately $75.5 million. The Company recorded assets and liabilities consisting of property, plant and equipment of approximately $28.1 million, intangible assets of approximately $27.2 million, goodwill of approximately $29.6 million and other net liabilities of approximately $(9.4) million including working capital and net debt. The Company is still assessing the provisional amounts recorded for assets acquired and liabilities assumed including possible future purchase price adjustments, thus the final determination of the value of assets acquired and liabilities assumed may result in retrospective adjustments to the values presented with a corresponding adjustment to goodwill The Company does not expect material changes to these pending amounts. The identifiable intangibles have a weighted average life of 15 years. Additionally, the Company completed other immaterial acquisitions in the first six months of fiscal 2022. The Company incurred acquisition costs of approximately $5.4 million and $9.1 million for the three and six months ended July 2, 2022, respectively related to the above disclosed acquisitions, including the Valley Acquisition, and other announced and potential future acquisitions that have yet to close.

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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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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