Business Combination

On July 31, 2015 (the "Closing Date"), the Company consummated a business combination (the “Business Combination”) pursuant to the Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), by and between the Company and Dow providing for the acquisition by the Company of the AgroFresh Business (defined below) from Dow, resulting in AgroFresh Inc. becoming a wholly-owned, indirect subsidiary of the Company. Pursuant to the Purchase Agreement, the Company paid the following consideration to Rohm and Haas Company (“Rohm and Haas”), a subsidiary of Dow: (i) 17,500,000 shares of common stock (the “Stock Consideration”) and (ii) $635 million in cash (the “Cash Consideration”). The “AgroFresh Business” refers to the business conducted prior to the closing of the Business Combination by Dow through a combination of wholly-owned subsidiaries and operations of Dow, including through AgroFresh Inc. in the United States. As a result of the Business Combination, the Company was identified as the acquirer for accounting purposes, and the AgroFresh Business is the acquiree and accounting Predecessor. The Company’s financial statement presentation reflects the AgroFresh Business as the “Predecessor” for periods through the Closing Date. On the Closing Date, Boulevard was re-named AgroFresh Solutions, Inc. and is the “Successor” for periods after the Closing Date, which includes consolidation of the AgroFresh Business subsequent to the Closing Date.

In addition to the Stock Consideration and the Cash Consideration, Dow is entitled to receive the following consideration:


•	A deferred payment from the Company of $50 million, subject to the Company’s achievement of a specified

average Business EBITDA, as defined in the Purchase Agreement, over the two year period from

January 1, 2016 to December 31, 2017;


•	6 million of the Company's warrants to be issued on or around April 30, 2016;


•	85% of the amount of the tax savings, if any, in U.S. Federal, state and local income tax or franchise tax that the Company actually realizes as a result of the increase in tax basis of the AgroFresh Inc. assets resulting from a section 338(h)(10) election that the Company and Dow made in connection with the Business Combination; and


•	reimbursement for any value-added or transfer taxes paid by Dow in conjunction with the transaction.

In addition, pursuant to the Purchase Agreement, the amount of the Cash Consideration paid as part of the purchase price is subject to adjustment following the Closing Date 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.

The Company accounted for its acquisition of the AgroFresh Business as a business combination under the scope of Accounting Standards Codification Topic ("ASC") 805, Business Combinations. Pursuant to ASC 805, the Company has been determined to be an accounting acquirer since the Company paid cash and equity consideration for all of the assets of the AgroFresh Business. The AgroFresh Business constitutes a business with inputs, processes and outputs. Accordingly, the acquisition of the AgroFresh Business constitutes the acquisition of a business in accordance with ASC 805 and is accounted for using the acquisition method.

The following summarizes the purchase consideration paid to Dow:



(in thousands)	Calculation of Purchase Price (As Originally Reported)		Measurement Period Adjustments			Calculation of Purchase Price as Adjusted
Cash consideration	$	635,000				$	635,000
Stock consideration ⁽¹⁾	210,000					210,000
Warrant consideration ⁽²⁾	19,020					19,020
Deferred payment ⁽³⁾	17,172		(2,000		)	15,172
VAT and transfer tax reimbursable to Dow ⁽⁴⁾			9,263			9,263
Tax amortization benefit contingency ⁽⁵⁾	145,174		11,006			156,180
Working capital payment to Dow			15,057			15,057
Total purchase price	$	1,026,366	$	33,326		$	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 on or about April 30, 2016. 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.

The determination of the purchase price, in particular the contingent consideration, is based on preliminary valuations and is subject to final adjustment to reflect the final valuations. These final valuations could have a material impact on the preliminary determination of the total purchase price disclosed above.

The Company recorded a preliminary allocation of the purchase price to the AgroFresh Business’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the Closing Date. The preliminary purchase price allocation is as follows:



	Preliminary Purchase Price Allocation (in thousands)			Measurement Period Adjustments			Preliminary Purchase Price Allocation (As Adjusted)
Cash and cash equivalents	$	9,459					$	9,459
Accounts receivable and other receivables	30,710			174			30,884
Inventories	129,062			(7,779		)	121,283
Prepaid expenses and other current assets	359			617			976
Total current assets	169,590			(6,988		)	162,602
Property and equipment	4,364						4,364
Identifiable intangible assets	836,044			5,501			841,545
Noncurrent deferred tax asset	401			10,607			11,008
Other assets	862						862
Total identifiable assets acquired	1,011,261			9,120			1,020,381
Accounts payable	(364		)				(364		)
Accrued and other current liabilities	(7,746		)	(1,679		)	(9,425		)
Pension and deferred compensation	(712		)	74			(638		)
Other long-term liabilities	(1,823		)				(1,823		)
Current deferred tax liability							—
Deferred tax liability	(14,772		)	4,254			(10,518		)
Other liabilities	(1,033		)	1,033			—
Net identifiable assets acquired	984,811			12,802			997,613
Goodwill	41,555			20,524			62,079
Total purchase price	$	1,026,366		$	33,326		$	1,059,692

The preliminary 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

The goodwill of $62.1 million arising from the Business Combination is primarily attributable to the market position of the AgroFresh Business. This goodwill is not expected to be deductible for income tax purposes.

The preliminary allocation of the purchase price, as well as the preliminary purchase price, is based on the preliminary valuations performed to determine the fair value of the net assets as of the acquisition date and is subject to final adjustment to reflect the final valuations, including the final working capital settlement and the value of contingent consideration. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.

If the Company and the Agrofresh Business had combined at January 1, 2015, net sales and net loss for the three month period ended March 31, 2015 would have been approximately $32.3 million and $9.9 million on a pro forma basis. The pro forma results include on an after-tax basis, incremental interest expense of approximately $8.8 million (including accretion of contingent consideration), incremental amortization of intangibles of approximately $1.6 million and incremental G&A expense of approximately $1.6 million. The pro forma results do not include the impact of the amortization of the inventory step-up.