v3.26.1
Note 14 - Business Combination
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Business Combination [Text Block]

14. BUSINESS COMBINATION

 

On February 19, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Telit IOT Solutions Inc., a Delaware corporation (the “Seller”), and SecureWise, pursuant to which the Company agreed to acquire the Seller’s SecureWise business (the “Business”) by means of a purchase of all of the outstanding equity interests of SecureWise held by the Seller (the “Transaction”).

 

On March 7, 2025, the Company completed the acquisition of the Business from the Seller pursuant to the Purchase Agreement for a cash purchase price of $130.0 million, subject to customary adjustments in respect of indebtedness, transaction expenses, cash and working capital of the Business, in each case, in accordance with the terms of the Purchase Agreement. The Company financed the Transaction using a combination of cash on hand and borrowings under the Credit Facilities.

 

The Company acquired SecureWise to accelerate equipment makers’ ability to derive value from equipment data by enabling them to leverage the Company’s Exensio analytics software and to expand the capability of the Company’s secure data exchange (“DEX”) outsourced semiconductor assembly and test (“OSAT”) network by allowing equipment makers, fab operators, and fabless companies to collaborate to optimize chip manufacturing and test.

 

The Company accounted for the Transaction as a business combination in accordance with ASC Topic 805, Business Combinations. This method requires that assets acquired, and liabilities assumed in a business combination be recognized at their respective estimated fair values as of the acquisition date. The Company allocated the purchase price to identifiable assets acquired based on their estimated fair values. The fair value of the consideration transferred, and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to assist with the measurement of the fair value of identifiable intangible assets. The estimated fair value of the identifiable assets acquired, and liabilities assumed was based on management’s best estimates. The fair value of the customer relationships was determined using the multi-period excess earnings income approach or cost approach. The fair value of trade names and developed technology was determined using the relief-from-royalty method. The fair value of acquired technology was determined using the cost approach. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The goodwill recorded from this acquisition represents business benefits the Company anticipates from the acquired workforce and expectation for expanded sales opportunities to foster further business growth. The goodwill associated with the acquisition is deductible for tax purposes.

 

The Company expensed all transaction costs in the period in which they were incurred. The total acquisition-related and integration costs related to the acquisition of SecureWise amounted to $5.4 million, of which the Company recorded $4.5 million in 2025 and $0.9 million in 2024.

 

The Company finalized the allocation of the purchase price to the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date, upon completion of the measurement period. The following table summarizes the final allocation of the purchase price for the acquisition of SecureWise, as of the date of the completion of the Transaction (in thousands, except amortization period):

           

Amortization

  
   

Amount

    

Period (Years)

  

Allocation of Purchase Price:

              

Fair value estimates of assets acquired and liabilities assumed

              

Cash

   $ 1,049        

Accounts receivable (1)

     2,955        

Prepaid and other assets

     2,896        

Property and equipment

     1,535        

Fair value of intangible assets:

              

Trademark

     6,600     5  

Customer relationships

     28,900     13  

Developed technology

     11,600     7  

Goodwill

     80,023     N/A  

Accounts payable and other current liabilities

     (4,791 )      

Total purchase price allocation

   $ 130,767        
 

(1)

 The estimated fair value of the accounts receivable acquired approximates the contractual value of $3.0 million.

 

Pro forma information reflecting the impact of the Transaction has not been presented as the Transaction was not material to the Company’s financial results.