Note 4 – Acquisitions

On January 22, 2015, the Company completed a merger in which Elecsys Corporation, a provider of machine-to-machine (M2M) technology solutions and custom electronic systems (formerly NASDAQ: ESYS) (“Elecsys”), was merged with a wholly-owned subsidiary of the Company. The Company paid $17.50 per share of Elecsys common stock outstanding (including cashing out of Elecsys equity compensation awards) for total merger cash consideration of $67.2 million, net of cash acquired of $3.4 million.

The Elecsys business capabilities will facilitate the Company’s development of efficient solutions for irrigation and other water uses as well as adjacent product lines and technologies. As part of the integration of Elecsys with the Company’s irrigation business, the Company is closing the Digitec, Inc. manufacturing facility in Milford, Nebraska and consolidating the electronics manufacturing operations with Elecsys. For the three and six months ended February 28, 2015, the Company incurred acquisition-related costs (including transaction and integration expenses) of $1.0 million and $1.5 million, respectively, which were included in general and administrative expenses on the condensed consolidated statement of operations.

The allocation of the consideration among the Elecsys assets acquired and liabilities assumed is considered preliminary because the appraisals of the identifiable assets acquired and liabilities assumed, including loss contingencies for shareholder litigation and tax liabilities remain open. The following table summarizes the merger consideration paid for Elecsys and the preliminary allocation of fair value of the assets acquired and liabilities assumed at the acquisition date.


$ in thousands	Amount
Cash and cash equivalents	$	3,401
Receivables		2,006
Inventories		8,467
Other current assets		1,527
Property and equipment		6,457
Intangible assets		24,850
Goodwill		38,791
Other long-term assets		41
Accounts payable and accrued liabilities		(2,762)
Current and long-term debt		(2,478)
Other long-term liabilities		(9,723)
Total cash consideration		70,577
Less cash acquired		(3,401)
Total cash consideration, net of cash acquired		67,176
Add current and long-term debt assumed		2,478
Total purchase price	$	69,654

The following table summarizes the identifiable intangible assets at fair value.



$ in thousands	Weighted Average Useful Life in Years	Fair Value of Identifiable Asset
Intangible assets:
Customer relationships	11.5	$	13,570
Tradenames	19.7		6,030
Developed technology (proprietary)	14.7		4,420
Non-compete agreements	4.5		430
Backlog	0.4		400
Total intangible assets	13.7	$	24,850

Goodwill related to the acquisition of Elecsys primarily relates to intangible assets that do not qualify for separate recognition, including the experience and knowledge of Elecsys management, its assembled workforce, and its intellectual capital and specialization with M2M communication technology solutions, data acquisition and management systems, and custom electronic equipment. Goodwill recorded in connection with this acquisition is included in the irrigation reporting segment and is non-deductible for income tax purposes. Pro forma information related to this acquisition was not included because the impact on the Company’s consolidated financial statements was not considered to be material.