Acquisition of Sangamo France

12 Months Ended

Dec. 31, 2019

NOTE 5 – ACQUISITION OF SANGAMO FRANCE

On July 20, 2018, Sangamo entered into various agreements with the goal of eventually acquiring 100% of Sangamo France’s share capital. The Company entered into the Sangamo France SPA with certain shareholders of Sangamo France, pursuant to which it acquired 13,519,036 ordinary shares of Sangamo France (“Ordinary Shares”) as part of a block transaction that closed on October 1, 2018 (the “Acquisition Date”). Additionally, the Company and Sangamo France entered into a Tender Offer Agreement pursuant to which Sangamo agreed to acquire 11,528,635 Ordinary Shares for the same price per share as the Sangamo France SPA via a cash tender offer that closed on November 23, 2018. Following the block transaction, cash tender offer, and other open market purchases of shares, the Company owned 98.2% of the Ordinary Shares as of December 31, 2018 (or 25,047,671 Ordinary Shares). In addition to the Sangamo France SPA and the tender offer agreement, the Company also entered into arrangements with the holders of approximately 477,000 “free shares” of Sangamo France pursuant to which the Company has the right to purchase such shares from the holders (a call option) and such holders have the right to sell to the Company such shares from time to time through mid-2021 (a put option) (collectively the “Free Shares Options”). In June 2019, Sangamo France became a société par actions simplifiée (“S.A.S.”) and was renamed from “TxCell” to “Sangamo Therapeutics France.” During 2019, the Company acquired approximately 111,000 vested free shares, increasing its ownership of the Ordinary Shares to 98.7% as of December 31, 2019.

At the Acquisition Date, the fair value of the Free Shares Options was estimated to be a liability of $0.2 million. See Note 2 - Fair Value Measurement – Free Shares Asset/Liability for information regarding the valuation method. The fair value of the Free Shares Options will vary based on future changes in the Company’s stock price during the option period. The fair value of the Free Shares Options was estimated to be an asset of $0.2 million as of December 31, 2019.

The acquisition of Sangamo France was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. The operating results of Sangamo France after the Acquisition Date have been included in the Company’s Consolidated Statements of Operations. There were no purchase price adjustments subsequent to the acquisition.

There were no goodwill impairments during the years ended December 31, 2019 or 2018 and, as noted below, substantially all of the non-controlling interest on the Acquisition Date was subsequently acquired by the Company and, accordingly, substantially all of the goodwill is allocated to the Company as of December 31, 2019 and 2018.

The following table summarizes the estimated consideration transferred and the fair value of the net assets acquired as of the Acquisition Date (in thousands):


	October 1, 2018
Consideration transferred	$	45,911
Fair value of non-controlling interest	35,829
Fair value of Sangamo France	$	81,740

Cash	$	4,779
Current assets	2,427
Property and equipment	1,857
IPR&D	55,019
Other assets	155
Current liabilities	(9,761)
Assumed debt liabilities	(4,933)
Deferred tax liability, net	(6,798)
Fair value of net identifiable assets acquired	42,745

Goodwill	38,995
Total fair value of net assets acquired	$	81,740

Non-controlling Interest

The fair value of the non-controlling interest at the Acquisition Date was based on the $2.99 acquisition price per share for the 11,981,867 Ordinary Shares that were not purchased by the Company in the block transaction on the Acquisition Date. Subsequent to the Acquisition Date and through December 31, 2018, the Company acquired 11,528,635 Ordinary Shares, which when aggregated with the 13,519,036 Ordinary Shares acquired at the Acquisition Date, resulted in the Company owning 98.2% of all Ordinary Shares as of December 31, 2018. During 2019, the Company acquired approximately 111,000 vested free

shares for approximately $0.3 million of cash, pursuant to the exercise of the Free Shares Options, increasing its ownership of the Ordinary Shares to 98.7% as of December 31, 2019.

Non-controlling interest as of December 31, 2019 was as follows (in thousands):


	Total






Balance, beginning of year	$	739
Fair value of additional shares acquired	(321)
Loss attributable to non-controlling interest	(233)
Balance, end of year	$	185