v3.26.1
Note 2 - Acquisitions
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Business Combination [Text Block]

2.

ACQUISITIONS

 

Acquisition of dataMate

 

On March 5, 2026, we completed the acquisition of dataMate (“dataMate”), a provider of Ethernet and broadband connectivity solutions, from Methode Electronics, Inc. for aggregate consideration of approximately $16.0 million, subject to customary post-closing adjustments. The acquisition was funded using cash on hand and borrowings under our senior secured revolving credit facility (the "Revolver") under the Amended and Restated Credit and Security Agreement with KeyBank National Association as amended, the "Credit Agreement" or the "CSA"). The acquisition was accounted for as a business combination under ASC 805, Business Combinations.

 

The acquisition is expected to broaden Bel’s customer reach and increase exposure to attractive end markets, including networking, data centers, industrial automation, smart buildings and broadband deployment, while providing R&D capabilities. Bel also believes the acquisition provides opportunities to leverage dataMate’s ongoing technology development, including solutions intended to deliver data and power over a single pair of wires, to support future product expansion.

 

No separate fair value step-up was recorded for inventory. Any further adjustments to the valuation of identifiable intangible assets will be reflected in goodwill as the purchase price allocation is finalized. Goodwill recognized in connection with the acquisition was $3.5 million, and all of the goodwill is expected to be deductible for income tax purposes, generally over a 15-year period. The purchase price allocation is preliminary and is subject to change as additional information becomes available, including as valuation work related to acquired intangible assets is finalized. The intangible assets will be amortized over 10 years using the straight-line method, and these assets will be periodically reviewed for impairment.

 

The results of operations of dataMate have been included in our condensed consolidated financial statements from the acquisition date. The results of dataMate are reported within the Company’s ITDS segment. The contribution of dataMate to our net sales was $4.4 million and $5.9 million for the three and six months ended June 30, 2026, respectively. The contribution of dataMate to our operating income was not material during those periods. Acquisition-related costs were immaterial and were expensed as incurred. Bel did not provide any material indemnifications to the seller other than customary indemnities included in the purchase agreement.

 

  

Preliminary

 
  

Acquisition Date

 
  

(as adjusted)

 
     

Accounts receivable

 $2,548 

Inventories

  2,119 

Other current assets

  647 

Total identifiable assets

  5,314 
     

Net fixed assets

  609 

Intangible assets

  8,000 

Goodwill

  3,494 

Net assets acquired

  17,417 
     
     

Working capital liabilities

  1,213 

Total consideration transferred

 $16,204 

 

The results of operations of dataMate have been included in the Company’s condensed consolidated financial statements for periods subsequent to the acquisition date of March 5, 2026. The following unaudited pro forma information presents the combined results of operations of the Company and dataMate as if the acquisition had occurred on January 1, 2025, as applicable to the periods presented. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred on the assumed date, nor is it intended to be a projection of future results. The unaudited pro forma information reflects adjustments that are directly attributable to the acquisition, factually supportable, and, with respect to the statements of operations, expected to have a continuing impact. The unaudited pro forma information does not reflect the realization of any anticipated cost savings, synergies, or operating efficiencies that may result from the acquisition, nor does it reflect any nonrecurring integration-related costs that may be incurred, while certain cost savings may result from the acquisition, there can be no assurance that such cost savings will be achieved.

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 
  

2026

  

2025

  

2026

  

2025

 
                 

Revenue, net

 $210,685  $173,082  $391,502  $329,306 

Net earnings

  33,975   27,919   49,401   46,613 

Less: Net earnings attributable to non-controlling interest

  1,757   822   2,729   1,660 

Redemption value adjustment attributable to noncontrolling interest

  6,738   (890)  9,371   (1,280)

Net earnings attributable to Bel Fuse shareholders

 $25,480  $27,987  $37,301  $46,233 

Earnings per Class A common share - basic

 $1.80  $2.12  $2.72  $3.51 

Earnings per Class A common share - diluted

 $1.79  $2.12  $2.72  $3.51 

Earnings per Class B common share - basic

 $1.89  $2.23  $2.86  $3.70 

Earnings per Class B common share - diluted

 $1.89  $2.23  $2.86  $3.70 

 

Acquisition of Enercon

 

On November 14, 2024, the Company closed on its acquisition of its majority 80% stake in Enercon, pursuant to the terms of the Share Purchase Agreement, dated as of September 19, 2024 (the “Purchase Agreement”), by and among the Company, Enercon, and FF3 Holdings, L.P., for itself and as Sellers’ Representative (“FF3”), and each of the other seller parties signatory thereto (collectively with FF3, the “Sellers”). Enercon is a leading supplier of highly customized power conversion and networking solutions to aerospace and defense markets globally, providing robust and reliable solutions across air, land and sea applications. Enercon is based in Netanya, Israel with additional facilities in New Hampshire, U.S. and Haryana, India.

 

Under the terms of the Purchase Agreement, on the November 14, 2024 closing date (and deemed effective solely for accounting purposes as of November 1, 2024), Bel acquired from the Sellers 80% of the issued and outstanding share capital of Enercon on a fully-diluted basis for (i) a cash purchase price of $320 million (subject to customary adjustments), plus (ii) up to $10 million in potential earnout payments for the 2025 - 2026 period (the “Earnout Payments”), as further described below (the “Transaction” or the "acquisition"). Bel may acquire the remaining 20% stake in Enercon and has the current intention to purchase such remaining interest by early 2027 in accordance with the terms and subject to the conditions of a shareholders’ agreement, which was also entered into on November 14, 2024.

 

The potential Earnout Payments may become payable of up to $5.0 million for each of the fiscal 2025 and fiscal 2026 earnout periods (each, an “Earnout Period”), subject to Enercon’s achievement of certain specified EBITDA targets for each respective Earnout Period, as calculated and determined in accordance with the Purchase Agreement. In the event that (i) the target for the respective Earnout Period has been achieved, the full $5.0 million Earnout Payment for the Earnout Period shall be payable, or (ii) achievement for the respective Earnout Period is at least 90% of the target level but less than 100% of the target level, then the amount payable in respect of the Earnout Payment for such Earnout Period shall be $2.5 million. In the event that achievement for the respective Earnout Period is less than 90% of the target level, no Earnout Payment shall be due for such period. The Earnout Payment associated with fiscal year 2025 was achieved in full and the Company paid $5 million to the Sellers during the first quarter of 2026 in connection with the 2025 earnout achievement.

 

The acquisition of Enercon resulted in a noncontrolling interest holder who is entitled to a put option, giving the sellers the ability to put their redeemable interest in the shares of the acquiree to the Company. Specifically, if exercised by the noncontrolling interest holder, the Company would be required to purchase the remaining 20% of the Seller's redeemable interest, at a redemption price during specified time period(s) stipulated in the Enercon acquisition agreement. The Company also has a corresponding call option with respect to the noncontrolling interest. Upon acquisition, the redeemable noncontrolling interest was initially valued at a fair value of $72.4 million. The redeemable noncontrolling interest reflected on the accompanying condensed consolidated balance sheets at June 30, 2026 and December 31, 2025 will remain in temporary equity until the applicable put-call option is either fully exercised or expires. At June 30, 2026 and December 31, 2025, the redeemable noncontrolling interest was adjusted to reflect its redemption value of $102.6 million and $93.2 million, respectively. The redemption value of the redeemable noncontrolling interest is generally calculated using Level 3 unobservable inputs based on a multiple of earnings. A roll-forward of the redeemable noncontrolling interest for the three and six months ending June 30, 2026 is included in the accompanying condensed consolidated statements of shareholders' equity and redeemable noncontrolling interest.