Note 2 - Acquisitions and Divestitures

12 Months Ended

Nov. 28, 2015

Notes to Financial Statements

Business Combination Disclosure [Text Block]

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 €1,459

,

or approximately $1,647, net of cash acquired of €329 or $371, was funded through existing cash and was recorded in our EIMEA operating segment. We incurred acquisition related costs of approximately $16, which were recorded as SG&A expenses in the Consolidated Statements of Income.

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

		Amount
Current assets	$	1,357
Property, plant and equipment		143
Goodwill		462
Other intangibles
Customer relationships		416
Noncompetition agreements		30
Other assets		7
Current liabilities		(591	)
Other liabilities		(177	)
Total purchase price	$	1,647

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 proceeds from our October 31, 2014 term loan, drawn in conjunction with the acquisition. The acquisition was recorded in our Asia Pacific operating segment. We incurred acquisition related costs of approximately $373, which were recorded as SG&A expenses in the Consolidated Statements of Income.

Concurrent with the acquisition, we entered into an agreement to acquire the remaining 5 percent of Tonsan’s equity beginning February 1, 2019 for 82 million Chinese renminbi or approximately $13,038. In addition, the agreement requires us to pay up to 418 million Chinese renminbi

,

or approximately $66,848

,

in contingent consideration based upon a formula related to 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 as of the date of acquisition were $11,773 and $7,714

, respectively. See Note 13 for further discussion of the fair value of the contingent consideration.

The fair value measurement was preliminary at November 28, 2015, subject to the completion of management's assessment of certain contingent liabilities. We expect the fair value measurement process to be completed in the first quarter of 2016.

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

	Valuation February 28, 2015			Fair Value Adjustments			Valuation November 28, 2015
Current assets	$	50,922		$	(1,083	)	$	49,839
Property, plant and equipment		58,549			593			59,142
Goodwill 1		155,232			(30,142	)		125,090
Other intangibles
Developed technology		18,500			100			18,600
Customer relationships		12,400			13,300			25,700
Trademarks/trade names		10,900			100			11,000
Other assets		139			13,401			13,540
Current liabilities		(30,590	)		(7,478	)		(38,068	)
Other liabilities 1		(49,497	)		12,352			(37,145	)
Redeemable non-controlling interests		(10,630	)		(1,143	)		(11,773	)
Total purchase price	$	215,925		$	-		$	215,925

1 Included in the fair value adjustments is the correction of an error related to the valuation of the contingent consideration and goodwill of $9,572 as of February 28, 2015.

The expected lives of the acquired intangible assets are 7 years for developed technology, 11 years for customer relationships and 14 years for trademarks/trade names. See Note 13 for further discussion of the fair value of the acquired tangible and intangible assets.

Based on the fair value measurement of the assets acquired and liabilities assumed, we allocated $125,090 to goodwill for the expected synergies from combining Tonsan with our existing business. Such goodwill is not expected to be deductible for tax purposes. The goodwill was assigned to our Asia Pacific operating segment.

We have analyzed Tonsan’s results of operations and concluded that it does not represent a material business combination. Therefore, we have not prepared unaudited pro forma consolidated results of operations, as if the acquisition of Tonsan had occurred at the beginning of fiscal 2015.

ProSpec® Construction Products

:

On September 3, 2014 we acquired the ProSpec construction products business, a provider of tile and stone installation products. 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:

		Amount
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

Plexbond Quimica, S.A.:

On June 6, 2013 we acquired Plexbond Quimica, S.A., a provider of chemical urethane adhesives and polyurethane resins based in Curitiba, Brazil. The purchase price of $10,390 was funded through existing cash and was recorded in our Americas Adhesives operating segment.

Divest

it

ures

Central

America Paints

:

On August 6, 2012 we completed the sale of our Central America Paints business. In accordance with ASC 205-20,

Discontinued Operations

, we have classified the results of this business as discontinued operations. The operational results of this business are presented in income (loss) from discontinued operations, net of tax and 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 original contingent consideration in the amount of $5,000 was included in current liabilities of discontinued operations in the Consolidated Balance Sheets at November 29, 2014. On June 15, 2015, we entered into an agreement to settle various matters related to the divestiture of the Paints business, including the settlement of the contingent consideration for $8,000. As a result of this agreement, we recorded a loss from discontinued operations, net of tax of $1,300. We paid $8,000 related to this agreement in the third quarter of 2015.