Acquisitions and Divestitures

3 Months Ended

Feb. 28, 2015

Acquisitions and Divestitures Abstract

Acquisitions and Divestitures Disclosure

Note 2: Acquisitions and Divestitures

Acquisitions

Continental Products Limited: On February 3, 2015 we acquired the equity of Continental Products Limited, a provider of industrial adhesives, based in Nairobi, Kenya. The acquisition supports our growth strategy for emerging markets and delivers specialty adhesive products to key customers in East and Central Africa. The purchase price of €1,517 or approximately $1,713, net of cash acquired of €329 or $371, was funded through existing cash and was recorded in our EIMEA (Europe, India, Middle East and Africa) operating segment.We incurred acquisition related costs of approximately $16, which were recorded as selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

The fair value measurement was preliminary at February 28, 2015.The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

	Preliminary Valuation February 28, 2015
Current assets	$	1,439
Property, plant and equipment		183
Goodwill		418
Other intangibles
Customer relationships		416
Noncompetition agreements		30
Other assets		7
Current liabilities		(591)
Other liabilities		(189)
Total purchase price	$	1,713

The expected lives of the acquired intangible assets are 13 years for customer relationships and 3 years for noncompetition agreements.

Tonsan Adhesive, Inc. On February 2, 2015 we acquired 95 percent of the equity of Tonsan Adhesive, Inc., an independent engineering adhesives provider based in Beijing, China. The acquisition strengthens our customer relationships in the high-value, fast growing engineering adhesives markets. The purchase price was 1.4 billion Chinese renminbi or approximately $215,925, net of cash acquired of $7,754, which was financed with the proceeds from our January 28, 2015 term loan and was recorded in our Asia Pacific operating segment. We incurred acquisition related costs of approximately $373, which were recorded as selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

Concurrent with the acquisition, the Company entered into an agreement to acquire the remaining 5 percent of Tonsan’s equity beginning February 1, 2019 for 74 million Chinese renminbi or approximately $11,773. In addition, the agreement requires the Company to pay up to 426 million Chinese renminbi or approximately $68,113 in contingent consideration based upon a formula related to the Tonsan’s gross profit in fiscal 2018. The fair values of the agreement to purchase the remaining equity and the contingent consideration based upon a discounted cash flow model were $10,630 and 38,772, respectively.

The acquisition fair value measurement was preliminary as of February 28, 2015, subject to the completion of the valuation of Tonsan Adhesive Inc. and further management reviews and assessment of the preliminary fair values of the assets acquired and liabilities assumed. We expect the fair value measurement process to be completed in the third quarter of 2015.

The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

	Preliminary Valuation February 28, 2015
Current assets	$	50,922
Property, plant and equipment		58,549
Goodwill		155,232
Other intangibles
Developed technology		18,500
Customer relationships		12,400
Trademarks/trade names		10,900
Other assets		139
Current liabilities		(30,590)
Other liabilities		(49,497)
Redeemable non-controlling interests		(10,630)
Total purchase price	$	215,925

The expected lives of the acquired intangible assets are 7 years for developed technology, 6 years for customer relationships and 14 years for trademarks/trade names.

Based on fair value measurement of the assets acquired and liabilities assumed, we allocated $155,232 to goodwill for the expected synergies from combining Tonsan with our existing business. The goodwill was assigned to our Asia Pacific operating segment.

ProSpec® Construction Products: On September 3, 2014 we acquired the ProSpec construction products business, a provider of tile and stone installation products. The acquisition was an asset purchase and strengthens our customer profile in the southeastern and western regions of the United States.The purchase price of $26,183 was funded through existing cash and was recorded in our Construction Products operating segment.

The following table summarizes the final fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:

	Final Valuation
Current assets	$	6,502
Property, plant and equipment		7,976
Goodwill		7,443
Other intangibles
Customer relationships		4,300
Technology		1,500
Trademarks/trade names		200
Current liabilities		(1,738)
Total purchase price	$	26,183

Divestitures

Central America Paints:On August 6, 2012 we completed the sale of our Central America Paints business to Compania Global de Pinturas S.A., a company of Inversiones Mundial S.A. The assets and liabilities of this business are presented on the Consolidated Balance Sheets as assets and liabilities of discontinued operations. A portion of the cash proceeds was determined to be contingent consideration, pending resolution of purchase agreement contingencies. The contingent consideration was valued at fair value based on level 3 inputs. The contingent consideration in the amount of $5,000 was included in current liabilities of discontinued operations in the Consolidated Balance Sheets at February 28, 2015 and November 29, 2014. There is a possibility that resolution of these pending purchase agreement contingencies could exceed our estimate by up to $15,000 pre-tax. Based on the currently available information, we have concluded that resolution of these pending contingencies in an amount greater than our current estimate is remote.