Acquisitions and Divestitures

Acquisitions are accounted for using the acquisition method and the acquired businesses’ results have been included in the accompanying consolidated financial statements from their respective dates of acquisition. In each case for the acquisitions disclosed below, pro forma information assuming the acquisition had occurred at the beginning of the earliest period presented is

not

included as the impact is immaterial.

Our acquisitions have historically been made at prices above the fair value of the acquired identifiable assets, resulting in goodwill, due to expectations of synergies that will be realized by combining businesses. These synergies include the use of our existing sales channel to expand sales of the acquired businesses’ products, consolidation of manufacturing facilities, and the leveraging of our existing administrative infrastructure.

The fair market valuations associated with these transactions fall within Level

(see Note

) of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value. The fair value measurements were calculated using unobservable inputs, primarily using the income approach, specifically the discounted cash flow method. The amount and timing of future cash flows within our analysis was based on our due diligence models, most recent operational budgets, long range strategic plans and other estimates.

CardioCel and VascuCel Biologic Patches

October 11, 2019 (

the Closing Date), we entered into an Asset Purchase Agreement (APA) to acquire the biologic patch business assets and a related technology license from Admedus Ltd and various of its subsidiaries (Admedus). The biologic patch business consists of the CardioCel and VascuCel product lines, which are manufactured in a manner intended to reduce the risk of calcification. The products are sold worldwide. On the same date, the parties entered into a Transition Services Agreement (TSA) under which Admedus will manufacture and supply LeMaitre with inventory for a period of up to

three

years, unless extended in writing by both parties. Revenues from the acquisition date through

December 31, 2019

were

$1.4

million.

Under the APA we agreed to pay Admedus a total of up to

$15.3

million for the purchase of substantially all of its biologic patch business assets, other than specifically identified Excluded Assets, plus

$8.0

million for the technology licenses. The acquired assets (in combination with the license) included inventory, intellectual property, permits and approvals, data and records, and customer and supplier information, as well as a small amount of machinery and equipment. At closing,

$14.2

million of the purchase price was paid to Admedus. Shortly thereafter another

$0.3

million was paid in connection with delivery of audited financial statements of the acquired business to LeMaitre. Additional consideration

may

be payable as follows:

●

$0.7

million (the First Holdback) within

days following the

first

anniversary of the Closing Date;

●

$0.7

million (the Second Holdback) within

days following the

third

anniversary of the Closing Date;

●

$2.0

million (the Third Holdback) within

days following LMAT’s receipt of a CE mark on all acquired products;

●

$2.5

million if revenues in the

first

-month period following the Closing Date exceed

$20

million, OR,

$1.2

million if revenues in the

first

-month period following the Closing Date exceed

$15

million;

●

$2.5

million if revenues in the

second

-month period following the Closing Date exceed

$30

million, OR,

$1.2

million if revenues in the

first

-month period following the Closing Date exceed

$22.5

million; and

●

$0.5

million if by the

first

anniversary of the Closing Date Admedus extends the shelf life of the products from

months to at least

months

The following table summarizes the preliminary purchase price allocation:

	Allocated
	Fair Value
	(in thousands)
Inventory and other	$	1,343
Intangible assets		8,725
Goodwill		7,344

Purchase price	$	17,412

The goodwill results from expected synergies of combining the acquired products and customer information to our existing operations, and is deductible for tax purposes over

years.

The following table reflects the allocation of purchase consideration to the acquired intangible assets and related estimated useful lives:

			Weighted
	Allocated		Average
	Fair Value		Useful Life (years)
	(in thousands)
Customer relationships	$	5,562	12.0
Intellectual property		2,335	8.0
Non-compete agreement		361	5.0
Tradenames		467	8.0

Total intangible assets	$	8,725

The weighted-average amortization period of the acquired intangible assets was

10.4

years.

Tru-Incise Valve Cutter

July 12, 2019,

we entered into an agreement with UreSil, LLC, an Illinois limited liability company, to purchase the remaining assets of their Tru-Incise valve cutter business, including distribution rights in the United States. We also entered into a transition services agreement under which UreSil, LLC will continue to manufacture the acquired products for us for a specified time, until we transition the full manufacturing process to our Burlington, Massachusetts facilities. Revenues from the acquisition date through

December 31, 2019

were

$0.8

million.

The purchase price for the acquired assets, which included inventory, machinery and equipment, intellectual property, and customer and supplier information, was

$8.0

million. Of this amount,

$6.8

million was paid at closing, with

three

follow-on payments

$0.4

million each due on the first,

second

and

third

anniversaries of the closing date. The deferred amounts totaling

$1.2

million were recorded at an acquisition-date fair value of

$1.1

million using a discount rate of

4.19%

to reflect the time value of money between the acquisition date and the payment due dates. There are

contingencies associated with these holdback payments, although they

may

be reduced for certain post-closing claims.

The following table summarizes the preliminary purchase price allocation:

	Allocated
	Fair Value
	(in thousands)
Inventory	$	276
Equipmentand supplies		70
Intangible assets		4,844
Goodwill		2,748

Purchase price	$	7,938

The goodwill results from expected synergies of combining the acquired products and customer information to our existing operations, and is deductible for tax purposes over

years.

The following table reflects the allocation of purchase consideration to the acquired intangible assets and related estimated useful lives:

			Weighted
	Allocated		Average
	Fair Value		Useful Life (years)
	(in thousands)
Customer relationships	$	3,945	13.0
Intellectual property		563	7.0
Non-compete agreement		233	5.0
Tradenames		103	7.0

Total intangible assets	$	4,844

The weighted-average amortization period of the acquired intangible assets was

11.8

years.

Cardial

October 22, 2018,

through a newly created subsidiary LeMaitre Cardial SAS, we entered into an agreement to acquire the business assets of Cardial, a company located in Saint-Etienne, France and formerly owned by Becton, Dickinson and Company. The Cardial business consists of the manufacturing of polyester vascular grafts, valvulotomes and surgical glue. On the same date, the parties entered into a separate agreement notarial deed under which LeMaitre Cardial SAS purchased the building and land previously owned by Cardial.

The purchase price for the acquired assets, including the land and building, inventory, machinery and equipment, intellectual property, permits and approvals, data and records, and customer and supplier information, was

€2.0

million (

$2.3

million). At closing,

€1.1

million (

$1.3

million) was paid in cash, and

€0.5

million (

$0.5

million) of liabilities were assumed by LeMaitre Cardial SAS. Another

€0.4

million (

$0.4

million) is due in

two

installments, half to be paid

twelve

months after the closing date, and half

eighteen

months after the closing date. There are

contingencies associated with these holdback payments, although they

may

be reduced depending upon the final results of a reconciliation of the value of inventory transferred, as outlined in the agreement.

The following table summarizes the purchase price allocation:

	Allocated
	Fair Value
	(in thousands)
Inventory	€	2,419
Land and building		750
Equipment and supplies		94
Intangible assets		623
Bargain purchase gain		(1,946	)

Purchase price	€	1,940

The bargain purchase gain was recorded to reflect the excess of the net assets acquired over the purchase price. We recorded deferred taxes on this gain of

€0.5

million (

$0.6

million), resulting in a net gain of

€1.4

million (

$1.6

million).

The following table reflects the allocation of purchase consideration to the acquired intangible assets and related estimated useful lives:

			Weighted
	Allocated		Average
	Fair Value		Useful Life (years)
	(in thousands)
Customer relationships	€	250	16.0
Intellectual property		237	5.0
Non-compete agreement		46	5.0
Tradenames		90	5.0

Total intangible assets	€	623

The weighted-average amortization period of the acquired intangible assets was

9.4

years.

Applied Medical

September 20, 2018,

we entered into an agreement to acquire the assets of the embolectomy catheter business of Applied Medical Resources Corporation (Applied). The clot management business consists of several embolectomy and thrombectomy catheter product lines which are sold worldwide (approximately

60%

in the U.S. and

40%

outside the U.S.). On the same date, we entered into a transition services agreement under which Applied will manufacture and supply us with inventory for a period of

twelve

months, unless extended in writing by both parties.

The purchase price for the acquired assets, which included inventory, machinery and equipment, intellectual property, permits and approvals, data and records, and customer and supplier information, was

$14.2

million. Of this amount,

$11

million was paid at closing, another

million was paid

months following the closing date, and the final

$1.2

million is due

months following the closing date. The deferred amounts totaling

$3.2

million were recorded at an acquisition-date fair value of

$3.043

million using a discount rate of

3.75%

to reflect the time value of money between the acquisition date and the payment due dates.

The following table summarizes the purchase price allocation. The purchase accounting is complete:

	Allocated
	Fair Value
	(in thousands)
Inventory	$	739
Equipment and supplies		416
Intangible assets		6,527
Goodwill		6,361

Purchase price	$	14,043

The goodwill results from expected synergies of combining the acquired products and customer information to our existing operations, and is deductible for tax purposes over

years.

The following table reflects the allocation of purchase consideration to the acquired intangible assets and related estimated useful lives:

			Weighted
	Allocated		Average
	Fair Value		Useful Life (years)
	(in thousands)
Customer relationships	$	4,475	16.0
Intellectual property		1,316	7.0
Non-compete agreement		530	5.0
Tradenames		206	7.0

Total intangible assets	$	6,527

The weighted-average amortization period of the acquired intangible assets was

13.0

years.

Reddick Divestiture

April

2018,

we entered into an asset purchase agreement with Specialty Surgical Instrumentation, Inc. to sell the inventory, intellectual property and other assets associated exclusively with our Reddick cholangiogram catheter and Reddick-Saye screw product lines for

$7.4

million. Concurrent with this divestiture we entered into a transition services agreement under which we will continue to manufacture and supply these products to the buyer for a period of up to

two

years unless extended by both parties, as well as a balloon supply agreement under which we will supply balloons, a component of the cholangiogram catheters, to the buyer for a period of up to

six

years unless extended by both parties. We recorded a gain in connection with these agreements of

$5.9

million. The following table summarizes the allocation of consideration received:

	Allocated
	Fair Value
	(in thousands)
Inventory	$	308
Deferred revenue - transition services agreement		1,081
Goodwill		135
Gain on divestiture		5,876

Consideration received	$	7,400

Under the terms of the transition services agreement, we agreed to manufacture the Reddick products for the buyer at prices at or in some cases below our cost. We allocated a portion of the consideration received to this agreement to reflect it at fair value and recorded it as deferred revenue. As the products were sold to the buyer, we amortized a portion of the deferred revenue to adjust the gross margin on the sale to fair value on a specific identification basis. Additionally, as the Reddick product lines that were divested constituted a business, we allocated a portion of our goodwill to this divestiture based on the fair value of the business sold in relation to the fair value of the business that will be retained.