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Acquisition
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
Acquisition
Acquisition
Georgia Pacific's Pine Chemical Business
On August 22, 2017, we entered into an Asset Purchase Agreement (the "Purchase Agreement") with Georgia-Pacific Chemicals LLC, Georgia-Pacific LLC (together with Georgia-Pacific Chemicals LLC, "GP") and Ingevity Arkansas, LLC, a wholly-owned subsidiary of Ingevity, to purchase substantially all the assets primarily used in GP's pine chemical business (the "Pine Chemical Business"), including assets and facilities related to tall oil fractionation operations and the production or modification of tall oil fatty acids, tall oil rosins, rosin derivatives and formulated products (the "Acquisition").
The purchase price for the Acquisition is $315 million, subject to a customary adjustment to reflect normalized working capital for the Pine Chemical Business. In addition to the purchase price, at the closing of the Acquisition, we will assume certain liabilities related to the Pine Chemical Business. We intend to use the net proceeds from the sale of the the Notes to finance the Acquisition. The closing of the Acquisition is subject to regulatory clearance and other customary closing conditions, which are currently ongoing. Pursuant to the Purchase Agreement, GP has agreed to indemnify the Company for losses resulting from a breach of certain representations and warranties and excluded liabilities, subject to certain limitations. Furthermore, the Purchase Agreement contains various termination provisions available to the parties thereto.
In addition, at the closing of the Acquisition, the Company and GP intend to enter into certain transition and shared services agreements to effectuate the transfer of the assets pursuant to the Acquisition. Separately, at the closing of the Acquisition, Ingevity and GP will also enter into a supply agreement, whereby certain of GP’s paper mills will supply CTO to Ingevity at market-based prices for a term of 20 years.
Acquisition costs
Pursuant to GAAP, costs incurred to complete the Acquisition are expensed as incurred. Charges incurred in connection with the planned Acquisition were $7.1 million, zero and zero for the years ended December 31, 2017, 2016 and 2015, respectively. These costs represent transaction costs and legal and professional third-party fees.