2. Acquisitions (Notes)

6 Months Ended

Jun. 30, 2020

Mergers, Acquisitions and Dispositions Disclosures

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

Celsee Acquisition:

On April 1, 2020 (the "Acquisition Date"), we acquired all equity interests of Celsee, Inc. ("Celsee") for total consideration of $99.5 million (as described in the table below), including the estimated fair value of contingent consideration. The contingent consideration of up to $60.0 million is payable in cash, upon the achievement of certain net revenues for the period beginning on January 1, 2021 and ending on December 31, 2022.

Celsee is a manufacturer of instruments and consumables for the isolation, detection, and analysis of single cells. We believe this acquisition will complement our Life Science product offerings. The acquisition was included in our Life Science segment's results of operations from the Acquisition Date.

Celsee met the definition of a business, and therefore is accounted for as a business combination.

The fair value of consideration transferred for the Celsee acquisition consists of the following (in millions):



Purchase price (cash)	$	99.4
Fair value of contingent consideration (earn-out)	0.1
Fair value of total consideration transferred	$	99.5

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the Acquisition Date (in millions):


	Preliminary Fair Value
Cash and cash equivalents	$	0.6
Intangible assets	79.9
Deferred tax assets	8.7
Deferred tax liabilities	(19.4)
Other identifiable assets acquired, net	0.3
Net identifiable assets acquired	70.1
Goodwill	29.4
Net assets acquired	$	99.5

Goodwill related to the acquisition is primarily attributable to opportunities and economies of scale from combining the operations and technologies of Bio-Rad and Celsee, and is not deductible for tax purposes.

The following table summarizes the preliminary estimated fair values and estimated useful lives of the components of identifiable intangible assets acquired as of the Acquisition Date (in millions):


	Preliminary Fair Value		Estimated Useful Life (years)
Developed product technology	$	70.3	18.9
Customer relationships	3.6		4.0
Covenants not to compete	1.4		3.0
In-process research and development	4.6
Total identifiable intangible assets acquired	$	79.9

Intangible assets acquired as a result of the Celsee acquisition are being amortized over their estimated useful lives using the straight-line method of amortization, which materially approximates the distribution of the economic value of the identified intangible assets. Amortization of acquired developed technology of $0.9 million during the three months ended June 30, 2020 is included in Cost of goods sold in the condensed consolidated statements of income. Amortization of the acquired customer relationships and covenants not to compete of $0.2 million and $0.1 million, respectively, during the three months ended June 30, 2020 are included in Selling, general and administrative expense in the condensed consolidated statements of income.

In-process research and development (IPR&D) is accounted for as an indefinite-lived asset. Once the project is completed, the carrying value of the IPR&D will be amortized over the estimated useful life of the asset. IPR&D is assessed for impairment on an annual basis until the project is completed.

We believe the values of acquired intangible assets reported above represent their fair values and approximate the amounts a market participant would pay for these intangible assets as of the Acquisition Date.

As additional information becomes available, such as finalization of the estimated fair value of the assets acquired and liabilities assumed, and working capital adjustments that may affect the total consideration transferred, we may revise the preliminary estimates of fair values of the tangible and intangible assets acquired and liabilities assumed during the remainder of the measurement period (which will not exceed 12 months from the Acquisition Date). Any such revisions or changes may be material as we finalize the fair values of those tangible and intangible assets acquired and liabilities assumed.

We included Celsee's estimated fair value of assets acquired and liabilities assumed in our condensed consolidated balance sheets beginning on the Acquisition Date. The results of operations for Celsee subsequent to the Acquisition Date have been included in, but are immaterial to, our condensed consolidated statements of income for the three and six months ended June 30, 2020. Pro forma results of operations for the Celsee acquisition have not been presented because they are not material to the condensed consolidated statements of income.

Distributor Acquisition:

In October 2019, we acquired all the issued and outstanding shares of a foreign distributor for approximately $4.2 million, which included cash payments at closing, net of closing cash, of $3.6 million, and $0.6 million in contingent consideration potentially payable to the sellers. In addition, we recorded a net gain of $0.4 million for the settlement of preexisting conditions concurrent with the acquisition that was recorded in Selling, general and administrative expense. The acquisition was included in our Clinical Diagnostics segment's results of operations from the acquisition date and was accounted for as a business combination. The amount of acquisition-related costs was minimal as Bio-Rad primarily represented itself during the acquisition process. Pro forma financial statements are not provided as the acquisition is immaterial to Bio-Rad taken as a whole for the periods presented.

The final allocation of the payments was $3.4 million to customer relationships, a definite-lived intangible, $0.2 million to deferred tax asset, $0.8 million to deferred tax liability related to the purchased intangible and $1.4 million to acquired net assets. The final allocation of payments was unchanged from our preliminary allocation for the period ended December 31, 2019.

DIVESTITURE

Informatics Divestiture:

In April 2020, we received $12.2 million for the sale of our Informatics division, which focused on providing and developing comprehensive, high-quality spectral databases and associated software. The division was part of our Other Operations segment. In connection with this sale, we recorded an $11.7 million gain in Other (income) expense, net, in the condensed consolidated statements of income for the three months ended June 30, 2020.