Business Combination (Tables)

12 Months Ended

Dec. 31, 2016

Summary of purchase consideration transferred



	Purchase Consideration
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

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(1)	The Company issued 17.5 million 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 million 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 is 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 $337.0 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 is 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.

Summary of purchase price allocation



(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		)
Deferred tax liability	(10,501		)
Net identifiable assets acquired	997,319
Goodwill	62,373
Total purchase price	$	1,059,692

Schedule of identifiable 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		18 Years
Service provider network	2,000		Indefinite Life
Trade names	35,500		Indefinite Life
Total intangible assets	$	841,545
Weighted average life of finite-lived intangible assets			19.7 years

Schedule of pro forma combined financial information

The following unaudited pro forma combined financial information presents the Company’s results as though the Company and the AgroFresh Business had combined at January 1, 2013. The unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S. GAAP (in thousands):



	(Unaudited)
(in thousands)	Year ended December 31, 2015 (pro forma)			Year ended December 31, 2014 (pro forma)
Net sales	$	162,596		$	178,508
Net loss⁽¹⁾	$	(19,756	)	$	(21,435	)

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(1)	Net loss in 2015 excludes the inventory step-up adjustment of $73.1 million and the mark-to-market adjustment on contingent consideration of $23.7 million.