Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.22.1
Acquisitions
9 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Business Combination Disclosure [Text Block]

Note 4. Acquisitions:

We periodically complete business combinations that align with our business strategy. Acquisitions are accounted for using the acquisition method of accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at fair value as of the acquisition date and that the results of operations of each acquired business be included in our consolidated statements of comprehensive income from their respective dates of acquisitions. Acquisition costs are recorded in selling, general and administrative expenses as incurred.

Fiscal year 2021 Acquisitions

Asuragen, Inc.

On April 6, 2021, the Company acquired all of the ownership interests of Asuragen, Inc. (Asuragen) for approximately $216 million, net of cash acquired, plus contingent consideration of up to $105.0 million, subject to certain revenue thresholds. The Asuragen acquisition adds a leading portfolio of best in-class molecular diagnostic and research products, including genetic screening, oncology testing kits, molecular controls, a GMP compliant manufacturing facility, and a CLIA-certified laboratory. The transaction was accounted for in accordance with ASC 805, Business Combinations. The goodwill recorded as a result of the acquisition represents the strategic benefits of growing the Company’ product portfolio and the expected revenue growth from increased market penetration. The goodwill is not deductible for income tax purposes. The business became part of the Diagnostics and Genomics operating segment in the fourth quarter of fiscal 2021.

Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations for the quarter ended March 31, 2022 were approximately $8.6 million and $0.1 million, respectively. Net sales and operating loss of this business included in Bio-Techne's consolidated results of operations for the nine months ended March 31, 2022 were approximately $25.0 million and $3.7 million, respectively.

The allocation of purchase consideration related to Asuragen was completed in the third quarter of fiscal year 2022. The fair values of the assets acquired and liabilities assumed at acquisition date and the updated final amounts as of March 31, 2022 are as follows (in thousands):

Preliminary allocation at 

Adjustments

    

Final allocation at 

acquisition date 

to fair value

March 31, 2022

Current assets, net of cash

$

10,422

$

$

10,422

Equipment and other long-term assets

 

3,762

 

3,762

Intangible assets:

Developed technology

 

107,000

 

107,000

In-process research and development

 

22,700

 

22,700

Customer relationships

 

11,700

 

11,700

Trade names

 

2,000

 

2,000

Non-competition agreement

 

1,000

 

1,000

Goodwill

 

94,970

(4,407)

 

90,563

Total assets acquired

 

253,554

(4,407)

 

249,147

Liabilities

 

4,003

960

 

4,963

Deferred income taxes, net

 

15,664

(5,367)

 

10,297

Net assets acquired

$

233,887

$

$

233,887

Cash paid, net of cash acquired

 

215,587

 

215,587

Contingent consideration payable

 

18,300

 

18,300

Net assets acquired

$

233,887

$

$

233,887

As summarized in the table, there were adjustments totaling $4.4 million to goodwill during the measurement period. These adjustments relate to refinements within our deferred tax amounts based on factors existing on the acquisition date.

Tangible assets and liabilities acquired were recorded at fair value on the date of close based on management's preliminary assessment. The purchase price allocated to developed technology, in-process research and development, and customer relationships was based on management's preliminary forecasted cash inflows and outflows and using a multiperiod excess earnings method to calculate the fair value of assets purchased. The amount recorded for developed technology is being amortized with the expense reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for developed technology is estimated to be 14 years. Amortization expense related to customer relationships is reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for customer relationships is estimated to be 16 years. The amount recorded for trade names and the non-competition agreement is being amortized with the expense reflected in selling, general and administrative expenses in the Condensed Consolidated Statement of Earnings and Comprehensive Income. The amortization period for trade names and the non-competition agreement is estimated to be 5 years and 3 years, respectively. The net deferred income tax liability represents the net amount of the estimated future impact of adjustments for costs to be recognized as intangible asset amortization, which is not deductible for income tax purposes, offset by the deferred tax asset for the preliminary calculation of acquired net operating losses.