Acquisitions and Divestitures

Acquisitions

Earthbound Farm

On January 2, 2014, the Company acquired Earthbound Farm, one of the largest organic produce brands in North America, from the existing shareholders in accordance with an Agreement and Plan of Merger dated December 8, 2013. The acquisition added to our focus on high-growth product categories that are aligned with emerging customer trends. The total consideration for the acquisition was approximately $608.7 million in cash. The acquisition was funded by approximately $615 million in borrowings under our senior secured credit facilities.

The acquisition was accounted for using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The fair values were determined by management based in part on an independent valuation of assets acquired, which includes intangible assets of $255.6 million. Intangible assets subject to amortization of $104.9 million are being amortized over a weighted average period of 15 years and relate primarily to customer and supplier relationships. We have completed the purchase price allocation related to the Earthbound acquisition, and negotiations regarding final purchase price adjustments were completed subsequent to the end of the second quarter. The gain from the final negotiation will be recorded in the third quarter of 2015 in our unaudited condensed consolidated statements of income.

The following table summarizes allocation of the purchase price to the fair value of assets acquired.



	January 2, 2014
	(In thousands)
Assets acquired:
Cash and cash equivalents	$	5,638
Inventories	22,299
Other current assets	54,260
Property, plant and equipment	147,390
Trademarks	150,700
Intangible assets with finite lives	104,900
Liabilities assumed:
Accounts payable and other accruals	58,328
Income taxes and deferred taxes, net	26,857
Obligations under capital leases	22,646
Total identifiable net assets	377,356
Goodwill	231,309
Total purchase price	$	608,665

Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, organic growth and other benefits that are expected to arise from integrating the Earthbound Farm assets into our operations. Goodwill was recorded in the Americas Fresh Foods segment. The amount of goodwill expected to be tax deductible is approximately $88.4 million.

So Delicious Dairy Free

On October 31, 2014, the Company acquired the company that owns So Delicious® Dairy Free ("So Delicious") from its existing shareholders for total consideration of approximately $196.6 million in cash. So Delicious manufactures, markets and distributes plant-based beverages, creamers, cultured products and frozen desserts and is based in Springfield, Oregon. The acquisition of So Delicious expands our portfolio of plant-based food and beverage products and provides the company with an entry into the growing, plant-based frozen dessert category. So Delicious’ results of operations have been included in our statements of income in our Americas Foods & Beverages segment from the date of acquisition.

The acquisition was accounted for using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The fair values were determined by management based in part on an independent valuation of assets acquired, which includes intangible assets of $83.0 million. Intangible assets subject to amortization of $29.8 million are being amortized over a weighted average period of 15 years and relate primarily to customer relationships. Certain estimated values for the So Delicious acquisition are not yet finalized pending the final purchase price allocations. In the six months ended June 30, 2015, we recorded $1.8 million of purchase accounting adjustments. We expect to finalize the allocation of the purchase price in 2015.

The following table summarizes allocation of the purchase price to the fair value of assets acquired and liabilities assumed. The allocation of the purchase price in the table below is preliminary and subject to change based on the finalization of the purchase price.



	October 31, 2014
	(In thousands)
Assets acquired:
Cash and cash equivalents	$	1,552
Inventories	21,528
Other current assets	10,585
Property, plant and equipment	8,504
Trademarks	53,216
Intangible assets with finite lives	29,768
Liabilities assumed:
Accounts payable and other accruals	11,050
Other long-term liabilities	429
Total identifiable net assets	113,674
Goodwill	82,951
Total purchase price	$	196,625

Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, organic growth and other benefits that are expected to arise from integrating the So Delicious assets into our operations. Goodwill is recorded in the Americas Foods & Beverages segment. All of the goodwill is tax deductible.

EIEIO

On May 29, 2015, the Company acquired substantially all of the assets and liabilities of EIEIO, Inc. the company that owns the Magicow ("Magicow") brand and other brands for $40.2 million in cash. Magicow, which is based outside Austin, Texas, manufactures, markets and distributes bulk, bag-in-box and shelf stable creamers, coffee beverages and whip toppings. The acquisition of Magicow expands our portfolio of bulk coffee creamer and flavor dispensing products and provides new product capabilities to support growth in our away-from-home channel. In connection with the acquisition of Magicow, we incurred $0.3 million in expenses for the three and six months ended June 30, 2015 related to due diligence, investment advisors and regulatory matters. The expenses directly associated with the acquisition were recorded in general and administrative expenses in our condensed consolidated statements of income and were not allocated to our segments and are reflected entirely within corporate and other. Magicow's results of operations have been included in our condensed consolidated statements of income of our Americas Foods & Beverages segment from the date of acquisition. Net sales were $1.5 million from the acquisition date to June 30, 2015.

The acquisition was accounted for using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their fair values. The fair values were determined by management based in part on an independent valuation of assets acquired, which includes intangible assets of approximately $21.8 million and relate primarily to tradenames. Intangible assets subject to amortization of approximately $10.2 million are being amortized over a 15 year term and relate primarily to customer relationships. Certain estimated values for the acquisition are not yet finalized pending the final purchase price allocations. We expect to finalize the allocation of the purchase price within one year of the acquisition.



	May 29, 2015
	(In thousands)
Assets acquired:
Cash and cash equivalents	$	1,530
Inventories	2,654
Other current assets	2,010
Property, plant and equipment	554
Trademarks	11,600
Intangible assets with finite lives	10,160
Liabilities assumed:
Accounts payable and other accruals	1,963
Other long-term liabilities	48
Total identifiable net assets	26,497
Goodwill	13,705
Total purchase price	$	40,202

Goodwill is calculated as the excess of consideration paid over the net assets acquired and represents synergies, organic growth and other benefits that are expected to arise from integrating the Magicow assets into our operations. Goodwill is recorded in the Americas Foods & Beverages segment. All of the goodwill is tax deductible.

Divestitures

SoFine

On March 31, 2014, we completed the sale of SoFine Foods BV (“SoFine”), a wholly-owned subsidiary that operated a soy-based meat-alternatives business in the Netherlands. Management’s intention to pursue a sale was based on the strategic decision to exit this non-core business of the Europe Foods & Beverages segment. In the fourth quarter of 2013, a write-down of $9.8 million was recorded and included in operating expenses in our financial statements.

Idaho Dairy Farm

In 2013, management approved a plan to sell the assets of its dairy farm located in Idaho which was completed in the fourth quarter of 2013. Management’s decision to sell the Idaho dairy farm was based on the strategic decision to focus on Americas Foods & Beverages' core processing, marketing and distribution capabilities. In conjunction with the sale of the Idaho dairy farm, we recorded an impairment charge of $11.1 million included in asset disposal and exit costs in our financial statements. Cash received at the time of sale in the fourth quarter of 2013 was $31.0 million, net of disposal costs. In addition, we recorded a note receivable for $6.4 million which was fully collected by the second quarter of 2014.

In addition to the impairment charge, we recorded a charge of $3.3 million related to lease liabilities, severance and related costs in connection with the Idaho dairy farm sale. Liabilities recorded and the changes therein for the six months ended June 30, 2014 were as follows:



	Accrued charges at December 31, 2013		Costs paid or otherwise settled			Reversal of prior expense			Accrued charges at June 30, 2014
	(In thousands)
Lease liability	$	2,674	$	(762	)	$	(351	)	$	1,561
Severance and related costs	632		(598		)	(55		)	(21		)
Total	$	3,306	$	(1,360	)	$	(406	)	$	1,540

During the six months ended June 30, 2014, we recorded a reversal of $0.7 million of the prior period expenses of which $0.3 million related to the impairment charge and $0.4 million related to the lease liability and severance costs. All liabilities were fully settled as of December 31, 2014.