Quarterly report pursuant to Section 13 or 15(d)

Asset Swap Transaction

v3.20.2
Asset Swap Transaction
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
Asset Swap Transaction
6. Asset Swap Transaction:
On February 19, 2020, the Company entered into a long-term agreement with a leading global thermoplastic producer to supply glass beads, and to meet that supply, exchanged inventory and production equipment related to the Company’s ThermoDrop® product line for inventory, production equipment and two glass bead manufacturing facilities (the “beads business”) of the thermoplastic producer (the “asset swap”) in a non-cash transaction. The acquisition of the beads business qualified for recognition as a business combination, which has been recorded using the acquisition method of accounting. Under the acquisition method, the purchase price is allocated to the identifiable net assets acquired based on the fair value as of the acquisition date. The excess of the purchase price over the fair value of the identifiable net assets acquired is recorded to goodwill.
The fair value of the assets exchanged related to the Company’s ThermoDrop® product line represents the purchase price consideration for the beads business. Based on the fair value of the assets disposed, the Company recognized a pre-tax loss on disposal of $6,475 during the nine months ended September 30, 2020, which is included in other operating expense, net in the Company’s condensed consolidated statement of income.
The following table sets forth the calculation and allocation of the consideration given and the identifiable net assets acquired with respect to the asset swap, which was complete as of June 30, 2020.
Provisional Purchase Price Allocation Adjustments Purchase Price
Allocation
Total consideration $ 25,166  $ 3,432  $ 28,598 
Recognized amounts of identifiable assets acquired and liabilities assumed:
Inventories $ 9,912  $ 127  $ 10,039 
Property, plant and equipment 9,490  1,339  10,829 
Right-of-use lease assets 378  —  378 
Fair value of assets acquired 19,780  1,466  21,246 
Operating lease liabilities, current (203) —  (203)
Operating lease liabilities, non-current (175) —  (175)
(378) —  (378)
Fair value of net assets acquired 19,402  1,466  20,868 
Goodwill 5,764  1,966  7,730 
$ 25,166  $ 3,432  $ 28,598 
The Company believes that the asset swap will expand its geographic footprint, enabling it to better serve its current and future customers. Combined with anticipated synergies within its existing business, this contributed to a total purchase price that resulted in the recognition of goodwill. All of the goodwill was assigned to the Company’s Performance Materials segment. The goodwill associated with the asset swap is expected to be deductible for tax purposes.
Results of the beads business since the date of the asset swap are included in the Company’s condensed consolidated statements of income and were not material for disclosure. Amounts that would have been recognized in the Company’s condensed consolidated statements of income during the three months ended March 31, 2020 had the adjustments to the provisional amounts been recognized as of the date of the asset swap were not material. Transaction costs associated with the asset swap were not material for the three and nine months ended September 30, 2020.