BUSINESS ACQUISITION

9 Months Ended

Sep. 26, 2021

Business Combination and Asset Acquisition [Abstract]

Kerry Consumer Foods' Meats and Meals

On September 24, 2021, the Company acquired 100% of the equity of the Kerry Consumer Foods' Meats and Meals businesses for cash of £695.3 million, or $954.1 million, subject to customary working capital adjustments. The acquisition was funded with the Company's recent senior notes offering and borrowings under the credit facility. The acquisition solidifies Pilgrim's as a leading European food company. The Specialty Meats business is a leading manufacturer of branded and private label meats, meat snacks and food-to-go products in the U.K. and Ireland. The Ready Meals business is a leading ethnic chilled and frozen ready meals business in the U.K. The acquired operations are included in the Company's U.K. and Europe reportable segment. Kerry Consumer Foods' Meats and Meals businesses operations for the period from September 24, 2021 through September 26, 2021 were insignificant.

Transaction costs incurred in conjunction with the acquisition were approximately $9.3 million for the nine months ended September 26, 2021. These costs were expensed as incurred and are reflected within Selling, general and administrative expense in the Company's Consolidated Statements of Income.

The assets acquired and liabilities assumed in the acquisition were measured at their values as of September 24, 2021 as set forth below. The excess of the purchase price over the preliminary fair value of the net intangible assets and identifiable assets was recorded as goodwill in the Company's U.K. and Europe reportable segment. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition as well the assembled workforce. Benefits include (1) complementary product offerings, (2) an enhanced footprint in the U.K. and Ireland and (3) an enhanced position in the fast-growing plant-based protein, direct-to-consumer and hot food-to-go markets. The goodwill is not expected to be tax deductible for tax purposes. The fair values of the assets acquired and liabilities assumed are preliminary and we are currently completing our fair value assessment with the assistance of third-party valuation specialists. Any adjustments identified in the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively.

The preliminary fair values recorded for the assets acquired and liabilities assumed for the acquisition are as follows (in thousands):


	Preliminary
Cash and cash equivalents	$	113
Trade accounts and other receivables	7,386
Inventories	60,339
Prepaid expenses and other current assets	7,953
Operating lease assets	14,967
Property, plant and equipment	170,617
Identified intangible assets	453,068
Total assets acquired	714,443

Accounts payable	8,016
Other current liabilities	9,568
Operating lease liabilities	13,405
Deferred tax liabilities	97,040
Other long-term liabilities	2,591
Total liabilities assumed	130,620
Total identifiable net assets	583,823
Goodwill	370,237
Total consideration transferred	$	954,060