On March 8, 2019, the Company acquired Digital Specialty Chemicals Limited (DSC), a Toronto, Canada-based provider of advanced materials to the specialty chemical, technology, and pharmaceutical industries. DSC reports into the Specialty Chemicals and Engineered Materials division of the Company. The acquisition was accounted for under the acquisition method of accounting and the results of operations of DSC are included in the Company’s condensed consolidated financial statements as of and since March 8, 2019. Costs associated with the acquisition of DSC were $2.1 million for the six months ended June 29, 2019 and were expensed as incurred. These costs are included in selling, general and administrative expense in the Company’s condensed consolidated statements of operations. The acquisition does not constitute a material business combination.

The purchase price for DSC is $64.0 million, net of cash acquired. The purchase price includes (1) cash consideration of $49.7 million, or $49.3 million net of cash acquired, subject to revision for customary working capital adjustments, which was funded from the Company’s existing cash on hand, (2) a fixed deferred payment of $16.1 million that is due on March 31, 2022, recorded at $14.0 million representing the fair value of this fixed deferred payment as of the acquisition date, and (3) an earnout-based contingent consideration of $0.7 million based on the operating performance of DSC for a twelve-month period ended March 31, 2021.

The fair value of the fixed deferred payment was determined by taking the present value of this fixed deferred payment based on the term and discount factor. The fixed deferred payment is reflected in the pension benefit obligations and other liabilities in the Company’s condensed consolidated balance sheets.

Upon closing the acquisition, the Company recorded a contingent consideration obligation of $0.7 million representing the fair value of the earnout-based contingent consideration. This amount was estimated based on a Black Scholes model. Subsequent changes in the fair value of this obligation will be recognized as adjustments to the contingent consideration obligation and reflected within the Company’s condensed consolidated statements of operations.

The purchase price of DSC exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $34.5 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be deductible for income tax purposes.

The following table summarizes the provisional allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at the date of the acquisition and as adjusted as of June 29, 2019:



(In thousands):	As of March 8, 2019			As of June 29, 2019
Trade accounts and note receivable, net	$	1,840		$	1,840
Inventories, net	5,523			4,353
Other current assets	1,389			1,391
Property, plant and equipment	16,791			16,652
Identifiable intangible assets	7,976			6,886
Right-of-use assets	79			79
Deferred tax asset	1,104			1,104
Other noncurrent assets	—			28
Accounts payable and accrued liabilities	(2,461		)	(2,540		)
Deferred tax liabilities	(2,861		)	(318		)
Long-term lease liability	(37		)	(37		)
Net assets acquired	29,343			29,438
Goodwill	35,133			34,516
Total purchase price, net of cash acquired	$	64,476		$	63,954

The final valuation of assets acquired and liabilities assumed is expected to be completed as soon as possible, but not later than one year from the acquisition date. Given the size and complexity of the acquisition, the valuation of certain assets and liabilities is still being completed and is subject to final review. To the extent that the Company’s estimates require adjustment, the Company will modify the values.

On June 25, 2018, the Company acquired the SAES Pure Gas business (SPG) from SAES Getters S.p.A. for approximately $352.7 million in cash, or $341.5 million net of cash acquired, funded from the Company’s existing cash on hand. The acquisition was accounted for under the acquisition method of accounting and the results of operations of SPG are included in the Company’s condensed consolidated financial statements as of and since June 25, 2018. Direct costs of $4.8 million associated with the acquisition of SPG, consisting mainly of professional and consulting fees, were expensed as incurred for the year ended December 31, 2018. These costs are included in selling, general and administrative expense in the Company’s condensed consolidated statements of operations.

SPG, based in San Luis Obispo, California, is a leading provider of high-capacity gas purification systems used in semiconductor manufacturing and adjacent markets, and reports into the Microcontamination Control Division of the Company. This acquisition expands the gas purification solutions portfolio in our Microcontamination Control Division with high-capacity products suited for bulk chemical purification applications.

The following table summarizes the final allocation of the purchase price to the fair values assigned to the assets acquired and liabilities assumed at December 31, 2018 and as adjusted as of June 29, 2019:



(In thousands):	As of December 31, 2018			As of June 29, 2019
Trade accounts and note receivable, net	$	19,173		$	19,173
Inventories, net	42,758			42,758
Other current assets	1,322			706
Property, plant and equipment	6,653			6,653
Identifiable intangible assets	150,430			150,430
Deferred tax assets	831			734
Other noncurrent assets	12			12
Current liabilities	(26,473		)	(26,473		)
Deferred tax liabilities	(35,533		)	(35,271		)
Other noncurrent liabilities	(1,412		)	(1,412		)
Net assets acquired	157,761			157,310
Goodwill	183,729			184,180
Total purchase price, net of cash acquired	$	341,490		$	341,490

The fair value of acquired inventories of $42.8 million is valued at the estimated selling price less cost of disposal and reasonable profit for the selling effort. The fair value write-up of acquired work-in-process and finished goods inventory was $8.9 million, the amount of which was amortized over the expected turn of the acquired inventory. Accordingly, $0.0 million and $2.0 million incremental cost of sales charge associated with the fair value write-up of inventory acquired in the acquisition of SPG was recorded for the three and six months ended June 29, 2019, respectively.

The Company recognized the following finite-lived intangible assets as part of the acquisition of SPG:



(In thousands)	Amount		Weighted average life in years
Developed technology	$	20,070	8.0
Trademarks and trade names	6,670		12.0
Customer relationships	107,790		12.0
Other	15,900		0.9
	$	150,430	10.0

The acquired identifiable intangible assets are being amortized on a straight-line basis. The fair value of acquired identifiable intangible assets was determined using the “income approach”. In performing these valuations, the key underlying probability-adjusted assumptions of the discounted cash flows were projected revenues, gross margin expectations and operating cost estimates. The valuations were based on the information that was available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by the Company’s management. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of the assets acquired and liabilities assumed were based on valuations involving significant unobservable inputs, or Level 3 inputs in the fair value hierarchy.

The purchase price of SPG exceeded the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $184.2 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. The purchase price also included the fair values of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value in addition to a going-concern element that represents the Company’s ability to earn a higher rate of return on the group of assets than would be expected on the separate assets as determined during the valuation process. This additional investment value resulted in goodwill. No amount of goodwill is expected to be deductible for income tax purposes.

During the quarter ended June 29, 2019, the Company finalized its fair value determination of the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed was based on the information that was available as of the acquisitions date, and the expectations and assumptions that have been deemed reasonable by the Company’s management.

On January 22, 2018, the Company acquired Particle Sizing Systems, LLC (PSS), which provides particle sizing instrumentation for liquid applications to the semiconductor and life science industries. The acquired assets and assumed liabilities became part of the Company’s Advanced Materials Handling (AMH) segment. The transaction was accounted for under the acquisition method of accounting and the results of operations of PSS are included in the Company’s condensed consolidated financial statements since January 22, 2018. The acquisition does not constitute a material business combination.

The purchase price for PSS was cash consideration of $37.3 million, funded from the Company’s existing cash on hand. Costs associated with the acquisition of the product line were not significant and were expensed as incurred.

The purchase price of PSS exceeds the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed by $8.8 million. Cash flows used to determine the purchase price included strategic and synergistic benefits (investment value) specific to the Company, which resulted in a purchase price in excess of the fair value of identifiable net assets. This additional investment value resulted in goodwill, which is expected to be deductible for income tax purposes.

During the year ended December 31, 2018, the Company finalized its fair value determinations of the assets acquired and liabilities assumed. The valuation of the assets acquired and liabilities assumed was based on the information that was available as of the acquisition date, and the expectations and assumptions that have been deemed reasonable by the Company’s management.

On June 26, 2018, the Company acquired Flex Concepts, Inc. (Flex), a technology company focused on single-use fluid handling bags, tubing manifolds and hardware for the life sciences industry. The purchase price of Flex was for cash

consideration of $1.9 million. The transaction was accounted for under the acquisition method of accounting and the results of operations of Flex are included in the Company’s condensed consolidated financial statements since June 26, 2018. The acquisition does not constitute a material business combination.