Business Combination

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Note 2 — Business Combination

Rocco & Roxie

The Company completed the acquisition of all of the membership units of Rocco & Roxie Supply Co, LLC ("R&R") on January 13, 2023, (the "R&R Acquisition"), which resulted in R&R becoming a wholly owned subsidiary of the Company. The R&R Acquisition expands the Company's brand and product portfolio to include stain and odor products and enables the Company to extend its offerings into premium dog supplements and jerky treats. The Company paid $26.5 million for

the membership interests of R&R using cash on hand, resulting in R&R becoming a wholly owned subsidiary of PetIQ. The purchase is subject to normal working capital adjustments.

The following table summarizes the preliminary allocations of the consideration paid, which included $26.5 million price plus $1.1 million of preliminary working capital, of the purchase price to the assets acquired and liabilities assumed, based on our current estimates of the fair value at the date of the R&R Acquisition:


$'s in 000's	Fair Value
Current assets	$	3,020
Other assets	1,208
Amortizable intangibles
Trade name	7,600
Customer relationships	320
Total amortizable intangibles	$	7,920
Goodwill	20,266
Total assets	$	32,414

Current liabilities	1,000
Other tax liabilities	3,780
Total liabilities	4,780

Purchase price, net of cash acquired	$	27,634

Intangible assets will be amortized over the estimated useful lives of the assets through January 2043. The weighted average amortization period of the amortizable intangible assets is approximately 19.4 years. The identifiable intangible assets are measured at fair value as Level III in accordance with the fair value hierarchy.

Goodwill represents the future economic benefits that do not qualify for separate recognition and primarily includes the assembled workforce and other non-contractual relationships, as well as expected future synergies. Approximately $19.0 million of the $20.3 million of Goodwill will not be tax deductible, and the remaining balance is expected to be deductible for tax purposes. Goodwill was allocated to the Products segment. Transaction costs of $0.5 million were incurred and are recorded in Selling, General, and Administrative costs on the condensed consolidated statement of operations.

The estimate of fair value and purchase price allocation were based on information available at the time of closing the R&R Acquisition. These preliminary estimates are subject to retrospective adjustments during the measurement period, not to exceed one year, based upon new information obtained about facts and circumstances that existed as of the date of closing the R&R Acquisition.