SIGNIFICANT ACQUISITIONS AND DIVESTITURES

6 Months Ended

Jun. 30, 2019

SIGNIFICANT ACQUISITIONS AND DIVESTITURES

On May 27, 2019, the Company acquired 100 percent of the outstanding common shares of Chemogas Holding NV and its subsidiaries ("Chemogas" or the "Acquisition"), a privately held specialty gases company headquartered in Grimbergen, Belgium. The Company made payments of approximately €99,503 (translated to $111,324) on the acquisition date, amounting to approximately €88,579 (translated to $99,102) to the former shareholders and approximately €10,924 (translated to $12,222) to Chemogas' lender to pay Chemogas bank debt. Considering the cash acquired of €3,943 (translated to $4,412), net payments made to the former shareholders were €84,636 (translated to $94,690). The acquisition was primarily financed through the Company's Credit Agreement (see Note 8, "Revolving Loan"). Chemogas is a leader in the packaging and distribution of a wide variety of specialty gases, most notably ethylene oxide, primarily in the European and Asian markets, for medical device sterilization. Through its operational and logistical excellence, Chemogas supports its customers' needs across more than 70 countries. With the acquisition, the Company significantly expands its geographic presence in the packaged ethylene oxide market, enabling the Company to offer worldwide service and support to its medical device sterilization customers within the Specialty Products segment. The Chemogas sites in Europe and Asia will form a global network of facilities when combined with the Company's sites in the United States.

The goodwill of $59,296 arising from the Acquisition consists largely of expected synergies, including the combined entities' experience and technical problem-solving capabilities, and acquired workforce. The goodwill is assigned to the Specialty Products segment and is not tax deductible for income tax purposes.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed:



Cash and cash equivalents	$	4,412
Accounts receivable	4,176
Inventories	957
Property, plant and equipment	13,972
Customer relationships	41,396
Developed technology	2,461
Trade name	1,119
Other assets	1,518
Accounts payable	(3,261		)
Bank debt	(12,222		)
Other liabilities	(937		)
Pension obligations (net)	(594		)
Deferred income taxes	(13,191		)
Goodwill	59,296
Amount paid to shareholders	99,102
Chemogas bank debt paid on purchase date	12,222
Total amount paid on acquisition date	$	111,324

The estimated valuation of the fair value of tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions that are subject to change. In preparing our preliminary fair value estimates of the intangible assets and certain tangible assets acquired, management, among other things, consulted an independent advisor. The purchase price and related allocation to assets acquired and liabilities assumed is preliminary pending management's final review of fair value calculations and deferred tax liabilities related to certain non-deductible assets.

Customer relationships are amortized over a 20-year period utilizing an accelerated method based on the estimated average customer attrition rate. Trade name and developed technology are amortized over 2 years and 10 years, respectively, utilizing the straight-line method as the consumption pattern of the related economic benefits cannot be reliably determined.

The Company is indemnified for tax liabilities prior to the Acquisition date. Indemnified tax liabilities will create an indemnification asset (receivable). At this time, an indemnification asset balance has not been established.

In connection with this transaction, the Company incurred transaction and integration costs of $556 and $862 for the three and six months ended June 30, 2019, respectively.

Total transaction and integration costs related to recent acquisitions, including the Chemogas acquisition described above, are recorded in general and administrative expenses. These costs amounted to $612 and $1,097 for the three and six months ended June 30, 2019, respectively, and $893 and $1,582 for the three and six months ended June 30, 2018, respectively.

Potential Divestiture

As of June 30, 2019, the Company was in negotiations for the sale of an insignificant portion of the Company's business and subsequently entered into an Asset Purchase Agreement for the sale of this portion of the business, which includes conditions to closing that must be fulfilled. The closing date of this transaction is still uncertain and no gain or loss has been recognized in the Company's condensed consolidated statements of earnings for the three or six months ending June 30, 2019. The anticipated gain or loss related to the transaction will not have a significant impact on the Company’s consolidated financial statements.

In connection with the potential divestiture, the following assets and liabilities have been reclassified as current assets held for sale and current liabilities held for sale within the Company's condensed consolidated balance sheets as of June 30, 2019:



	June 30, 2019
Accounts receivable	$	996
Inventory	292
Property, plant, and equipment, net	9,354
Right of use assets	291
Goodwill	1,380
Assets held for sale	$	12,313

Trade accounts payable	$	236
Lease liabilities	294
Liabilities held for sale	$	530