Quarterly report pursuant to Section 13 or 15(d)

Business Acquisitions

v3.21.2
Business Acquisitions
9 Months Ended
Sep. 30, 2021
Business Combination And Asset Acquisition [Abstract]  
Business Acquisitions
3.
BUSINESS ACQUISITIONS

LaderaTech Acquisition

On May 7, 2020, the Company used proceeds from general business operations to purchase all of the outstanding shares of LaderaTech, Inc. (the “LaderaTech acquisition”). The LaderaTech acquisition expands the Company’s access to the long-term retardant market and is expected to generate synergies within the Fire Safety service industry.

Under the equity purchase agreement, the fair value of the consideration transferred was $21,832, which included an initial cash payment of $2,016 and $19,816 in estimated fair value of contingent future payments.

 

The future payments are contingent upon the acquired technology being listed on the U.S. Forest Service’s Qualified Product List (QPL) valued at $2,813 and an earn-out based on achieving certain thresholds of revenues through December 31, 2026 with an estimated fair value at $17,003. As of September 30, 2021, the estimated fair value of the QPL listing payment is $2,952 and the estimated fair value of contingent consideration was $19,627. Based on the purchase price allocation, the assets acquired principally comprise $20,200 of an identifiable intangible asset, $6,906 of goodwill, $46 of cash, $5,282 of deferred tax liability, and a net liability for other working capital items of $38. The identifiable intangible asset (in-process research and development) relates to a proprietary technology being used to develop its base product, and the Company expects immaterial remaining costs to achieve QPL approval and make the product ready for distribution within the year ending December 31, 2021.

 

The amount allocated to goodwill for the acquisitions is not deductible for income tax purposes. The goodwill is attributable primarily to strategic and synergistic opportunities, the assembled workforces acquired and other factors. The fair value of the contingent consideration was estimated using the Monte Carlo valuation approach. See Note 13—Fair Value Measurements for additional information related to the fair value measurement of the contingent consideration.

 

For segment reporting purposes, the results of operations and assets from the LaderaTech acquisition has been included in the Company’s Fire Safety segment since the acquisition date. For the three and nine months ended September 30, 2021, sales related to the LaderaTech acquisition were $444 and $727, respectively. Sales for the three and nine months ended September 30, 2020 related to LaderaTech were not material. Direct costs of the acquisition were not material and were expensed as incurred and are included in Other Operating Expenses in the consolidated statement of income and comprehensive income during the three and nine months ended September 30, 2021 and 2020.

Budenheim Acquisition

On March 2, 2021, the Company used proceeds from general business operations to purchase all of the wildfire retardant and foam assets of Budenheim Iberica, S.L.U. The asset purchase agreement provided for approximately $3,607 in cash to be paid at closing. The Budenheim acquisition expands the Company’s access to new markets and is expected to result in additional revenue within the Fire Safety segment. The Company has performed a preliminary purchase price allocation, where the Company allocated $3,214 to goodwill. Other amounts allocated to the individual assets and liabilities included within the balance sheet were not material.

PC Australasia Acquisition

On April 1, 2021, the Company used proceeds from general business operations to purchase all of the wildfire retardant and foam assets of PC Australasia Pty Ltd. The asset purchase agreement provided for approximately $2,657 in cash to be paid at closing. The PC Australasia acquisition provides the Company direct access to existing markets within the Fire Safety service industry. The Company has performed a preliminary purchase price allocation, where the Company allocated $971 to goodwill. Other amounts allocated to the individual assets and liabilities included within the balance sheet were not material.

Magnum Acquisition

On July 1, 2021, the Company used proceeds from general business operations to purchase all of the assets of Magnum Fire & Safety Systems. The asset purchase agreement provided for approximately $1,200 in cash to be paid at closing. The Magnum acquisition expands the Company’s access to new markets and is expected to result in additional revenue in firefighting foam equipment and systems within the Fire Safety service industry. The Company has performed a preliminary purchase price allocation, where the Company allocated $1,200 to goodwill. Individual assets and liabilities included within the balance sheet were not material.

For segment reporting purposes, the results of operations and assets from these acquisitions have been included in the Company’s Fire Safety segment since the respective acquisition dates. For the three and nine months ended

September 30, 2021, sales, earnings related to the operations consisting of the assets and liabilities and direct costs related to Budenheim, PC Australia and Magnum were not material. Pro forma financial information has not been presented for these acquisitions as the net effects were neither significant nor material to the Company’s results of operations or financial position.

Business Combination – Perimeter Solutions

On June 15, 2021, the Company’s Sponsor entered into a definitive Business Combination Agreement with Everarc Holdings Limited to acquire Perimeter Solutions in a transaction valued at approximately $2 billion, such amount of which includes the proceeds from the issuance of the senior secured notes. As a result of the transaction, Perimeter Solutions has been determined to be the predecessor of the Post-Combination Company. The transaction financing is fully committed and is not subject to shareholder approval. The transaction closed on November 8, 2021.