Acquisitions

6 Months Ended

Jun. 30, 2020

(3)	Acquisitions

During the six months ended June 30, 2020, the Company purchased four newly constructed inland pressure barges for $26,625,000 in cash.

On April 1, 2020, the Company completed the acquisition of the inland tank barge fleet of Savage Inland Marine, LLC (“Savage”) for $278,999,000 in cash. Savage’s tank barge fleet consisted of 92 inland tank barges with approximately 2.5 million barrels of capacity and 45 inland towboats. The Savage assets that were acquired primarily move petrochemicals, refined products, and crude oil on the Mississippi River, its tributaries, and the Gulf Intracoastal Waterway. The Company also acquired Savage’s ship bunkering business and barge fleeting business along the Gulf Coast. The Company considers Savage to be a natural extension of the current marine transportation segment, expanding the capabilities of the Company's inland based marine transportation business and lowers the average age of its fleet.

On January 3, 2020, the Company completed the acquisition of substantially all the assets of Convoy Servicing Company and Agility Fleet Services, LLC (collectively “Convoy”) for $37,180,000 in cash. Convoy is an authorized dealer for Thermo King refrigeration systems for trucks, railroad cars and other land transportation markets for North and East Texas and Colorado.

The fair values of the assets acquired and liabilities assumed from the Savage and Convoy acquisitions recorded at the respective acquisition dates were as follows (in thousands):

	Savage		Convoy
Assets:
Accounts receivable	$	—	$	5,677
Inventories		—		11,771
Prepaid expenses		1,067		177
Property and equipment		210,065		415
Operating lease right-of-use assets		27,755		3,713
Goodwill		81,667		10,309
Other intangibles		2,200		17,170
Total assets	$	322,754	$	49,232
Liabilities:
Accounts payable and accrued liabilities	$	—	$	8,339
Operating lease liabilities, including current portion		43,755		3,713
Total liabilities	$	43,755	$	12,052
Net assets acquired	$	278,999	$	37,180

The Company acquired customer relationships with an estimated value of $2,200,000 from Savage with an amortization period of 10 years. The fair values of the Savage acquisition have not been finalized and are provisional, pending completion of the tangible and intangible valuation studies. As additional information becomes known concerning the assets acquired, the Company may make adjustments to the fair value of assets acquired and liabilities assumed for up to one year following the acquisition date. Acquisition related costs of $281,000, consisting primarily of legal and other professional fees, were expensed as incurred to selling, general and administrative expense in the 2020 second quarter. All goodwill recorded for the Savage acquisition will be deductible for tax purposes.

The Company acquired intangible assets from Convoy with a weighted average amortization period of 11 years, consisting of $9,000,000 for customer relationships with an amortization period of 10 years, $8,000,000 for distributorships with an amortization period of 12 years and $170,000 for non-compete agreements with an amortization period of three years. All goodwill recorded for the Convoy acquisition will be deductible for tax purposes.

Pro forma results of the acquisitions made in the 2020 first six months have not been presented as the pro forma revenues and net earnings attributable to Kirby would not be materially different from the Company’s actual results.