Acquisition of Bioline Group

9 Months Ended

Jun. 30, 2011

Acquisition of Bioline Group [Abstract]

3. Acquisition of Bioline Group

On July 20, 2010, we acquired all of the outstanding common stock of the Bioline group of companies (collectively the “Bioline Group”). We paid $23,849 from cash and equivalents on hand to acquire the Bioline Group. Headquartered in London, England, the Bioline Group is a leading manufacturer and distributor of molecular biology reagents with additional operations in Germany, Australia and the United States. The highly specialized molecular biology reagents it supplies to the life science research, biotech, pharmaceutical and commercial diagnostics markets are the critical components used in PCR testing for DNA, RNA and other genomic testing.

As a result of the consideration paid exceeding the fair value of the net assets being acquired, goodwill in the amount of $12,992 was recorded in connection with this acquisition, none of which will be deductible for tax purposes. This goodwill results largely from the addition of key global operations and direct sales capabilities, management talent and a research-oriented customer base, to complement our existing Life Science operations. In addition to the Bioline Group’s results of operations, which are included in our Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2011 and reported as part of the Life Science operating segment, the consolidated results for the three and nine months ended June 30, 2011 also include:

	i)		$0 and $587 of Cost of Sales for the three and nine months, respectively, related to the roll-out of fair value inventory adjustments for sales of products that were in the Bioline Group’s inventory on the date of acquisition and, therefore, were valued at fair value, rather than manufactured cost, in the opening balance sheet; and

	ii)		$260 and $767 of General and Administrative Expenses for the three and nine months, respectively, related to the amortization of specific identifiable intangible assets recorded on the opening balance sheet, including customer relationships, license agreements, non-compete agreements, manufacturing processes and trade names.

The results of the Bioline Group included in the consolidated results of the Company for the three and nine months ended June 30, 2011 are as follows, reflecting the items noted above and adjustments to the Group’s income tax provision during the three months ended June 30, 2011:


	Three			Nine
	Months			Months
	Ended			Ended
	June 30, 2011			June 30, 2011
Net Sales	$	3,905		$	10,966
Operating Income (Loss)	$	83		$	(91	)
Net (Loss) Earnings	$	(31	)	$	28

The recognized amounts of identifiable assets acquired and liabilities assumed in the acquisition of the Bioline Group are as follows:


	July 20,
	2010		Measurement			July 20,
	(as initially		Period			2010
	reported)		Adjustments			(as adjusted)
Fair value of assets acquired -
Cash and equivalents	$	3,445				$	3,445
Accounts receivable		1,897					1,897
Inventories		2,807					2,807
Other current assets		371	$	(21	)		350
Property, plant and equipment, net		816					816
Goodwill		13,166		(174	)		12,992
Other intangible assets (estimated useful life):
Customer relationships (10 years)		3,898					3,898
Manufacturing processes (6 years)		1,467					1,467
License agreements (approx. 8 year wtd. avg.)		718					718
Non-compete agreements (1 year)		122					122
Trade names (10 years)		995					995

		29,702		(195	)		29,507
Fair value of liabilities assumed -
Accounts payable and accrued expenses		2,817		364			3,181
Deferred income tax liabilities		3,036		(559	)		2,477

Total consideration paid	$	23,849	$	—		$	23,849

As of June 30, 2011, the purchase price allocation related to the acquisition of the Bioline Group has been finalized and is reflected in the above fair values of the assets acquired and liabilities assumed. These fair values are based on the information that was available as of the acquisition date and the subsequent filing of this Form 10-Q and are reflected in the accompanying Condensed Consolidated Balance Sheets, including retrospective adjustment of the September 30, 2010 Condensed Consolidated Balance Sheet.

The consolidated pro forma results of the combined entities of Meridian and the Bioline Group, had the acquisition date been October 1, 2009, are as follows for the periods indicated:


	Three Months				Nine Months
	Ended June 30,				Ended June 30,
	2011		2010		2011		2010

Net Sales	$	40,052	$	37,361	$	118,374	$	117,208
Net Earnings	$	6,857	$	7,201	$	20,565	$	20,757
Diluted Earnings Per Common Share	$	0.17	$	0.17	$	0.50	$	0.50

These pro forma amounts have been calculated after adjusting the results of the Bioline Group to reflect the transaction costs incurred by the Company and the additional amortization that would have been charged assuming the previously-discussed fair value adjustments to inventory and identifiable intangible assets had been applied on October 1, 2009, together with the consequential tax effects. Fiscal 2011 pro forma earnings exclude $21 and $444 for the three and nine month periods, respectively, related to amortization of the fair value adjustments to inventory and identifiable intangible assets and the related tax effects, as these amounts have been included in the fiscal 2010 pro forma earnings.