Business Combination (Tables)

6 Months Ended

Jun. 30, 2016

Summary of purchase consideration transferred

The following summarizes the purchase consideration paid to Dow:



(in thousands)	Purchase Consideration Paid
Cash consideration	$	635,000
Stock consideration ⁽¹⁾	210,000
Warrant consideration ⁽²⁾	19,020
Deferred payment ⁽³⁾	15,172
VAT and transfer tax reimbursable to Dow ⁽⁴⁾	9,263
Tax amortization benefit contingency ⁽⁵⁾	156,180
Working capital payment to Dow ⁽⁶⁾	15,057
Total purchase price	$	1,059,692


(1)	The Company issued 17,500,000 shares of common stock valued at $12.00 per share as of July 31, 2015.


(2)	In connection with the Business Combination, the Company entered into a Warrant Purchase Agreement whereby it agreed to issue to Dow a certain number of warrants. The Company calculated the fair value of the 6,000,000 warrants expected to be issued to Dow at $3.17 per warrant as of July 31, 2015.


(3)	Pursuant to the Purchase Agreement, the Company agreed to pay Dow a deferred payment of $50 million subject to the achievement of a specified average Business EBITDA level over the two year period from January 1, 2016 to December 31, 2017. The Company estimated the fair value of the deferred payment using the Black-Scholes option pricing model.


(4)	Pursuant to the Purchase Agreement, the Company was required to reimburse Dow for any value-added or transfer taxes paid by Dow in conjunction with the Business Combination.

(5)

In connection with the Business Combination, the Company entered into a Tax Receivables Agreement with Dow. The Company estimated the fair value of future cash payments based upon its estimate that the undiscounted cash payments to be made total approximately $343 million and are based on an estimated intangible write-up amortized over 15 years, tax effected at 37%, with each amortized amount then discounted to present value utilizing an appropriate market discount rate to arrive at the estimated fair value of the cash payments and the associated liability.


(6)	Pursuant to the terms of the Purchase Agreement, the amount of the Cash Consideration paid as part of the purchase price was subject to adjustment following the Closing based upon the working capital of the AgroFresh Business as of the Closing Date being greater or less than a target level of working capital determined in accordance with the Purchase Agreement.

Purchase price allocation

The purchase price allocation (in thousands) is as follows:



(in thousands)	Purchase Price Allocation
Cash and cash equivalents	$	9,459
Accounts receivable and other receivables	30,884
Inventories	120,426
Prepaid expenses and other current assets	976
Total current assets	161,745
Property and equipment	4,793
Identifiable intangible assets	841,545
Noncurrent deferred tax asset	11,125
Other assets	862
Total identifiable assets acquired	1,020,070
Accounts payable	(364		)
Accrued and other current liabilities	(9,425		)
Pension and deferred compensation	(638		)
Other long-term liabilities	(1,823		)
Current deferred tax liability	—
Deferred tax liability	(10,501		)
Other liabilities	—
Net identifiable assets acquired	997,319
Goodwill	62,373
Total purchase price	$	1,059,692

Intangible assets acquired and useful lives

The values (in thousands) allocated to identifiable intangible assets and their estimated useful lives are as follows:



(in thousands, except useful life data)	Fair Value		Useful life
Software	$	45	4 years
Developed technology	757,000		12 to 22 years
Customer relationships	8,000		24 years
In-process research and development	39,000		Indefinite Life
Service provider network	2,000		Indefinite Life
Trade name	35,500		Indefinite Life
Total intangible assets	$	841,545
Weighted average life of finite-lived intangible assets			19.7