v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination [Abstract]  
Business Combinations

NOTE 3. Business Combinations

The Company, together with Holdings, completed the US Salt Acquisition on February 26, 2026, resulting in the acquisition of 100% of the issued and outstanding equity units of US Salt (the "Business Combination"). US Salt is a leading provider in the evaporated salt market, specializing in the extraction, refinement, and packaging of specialty salts. Its products serve diverse sectors, including retail grocery, pharmaceuticals, industrial applications, and food service.

As a result of the US Salt Acquisition, the Company’s financial statement presentation distinguishes US Salt as the "Predecessor" through February 26, 2026 (the "Closing Date"). The Company, which consolidated US Salt subsequent to the Business Combination, is the "Successor" for periods after the Closing Date. As a result of the application of the acquisition method of accounting in the Successor period, the financial statements for the Successor period present US Salt on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor period that are not presented on the same full step-up basis.

During the period from February 27, 2026 to June 30, 2026 (Successor) and the period from January 1, 2026 to February 26, 2026 (Predecessor), the Company incurred $21.2 million and $0.1 million, respectively, of transaction costs related to the acquisition of US Salt. These expenses are included in transaction expenses on the Company's Condensed Consolidated Statements of Operations for each respective period.

The fair value of the total consideration transferred was determined as follows:

 

 

Fair Value Consideration Transferred

 

 

(in millions)

 

Payments made to the Seller Parties

 

 

Cash consideration

$

386.8

 

Repayment of US Salt debt

 

209.7

 

Total cash consideration

 

596.5

 

Rollover equity

 

325.2

 

Total equity consideration

 

325.2

 

Total consideration

$

921.7

 

 

The equity consideration was calculated based on the number of shares issued at $8.00 per share and determined as follows:

 

 

Fair Value Equity Consideration

 

 

($ in millions, shares in thousands)

 

ContextLogic common shares issued to consummate the US Salt Acquisition

 

15,480.4

 

Holdings preferred units issued to consummate the US Salt Acquisition

 

25,175.6

 

Total shares issued

 

40,656.0

 

Price per share issued

$

8.00

 

Fair value of the equity consideration

$

325.2

 

The Company has applied the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, and recognized assets acquired and liabilities assumed at their fair values as of the Closing Date, with the excess consideration transferred recorded to goodwill. The Company is continuing to obtain information to complete its valuation of certain assets and liabilities. Preliminary estimates have been recorded and additional adjustments may be recorded to the fair value of intangible assets, property, plant and equipment, goodwill and deferred income taxes among other items during the measurement period, a period not to exceed 12 months from the Closing Date.

The following table summarizes the preliminary acquisition date fair value of tangible and intangible assets acquired, net of liabilities assumed as part of the US Salt Acquisition:

 

 

Fair Value

 

 

(in millions)

 

Cash and cash equivalents

$

11.3

 

Prepaid expenses and other current assets

 

0.9

 

Accounts receivable

 

13.4

 

Inventory

 

12.7

 

Property, plant and equipment

 

396.7

 

Intangible assets

 

388.0

 

Right-of-use asset

 

1.5

 

Other noncurrent assets

 

5.2

 

Total assets

 

829.7

 

Accrued liabilities

 

4.2

 

Accounts payable

 

6.8

 

Current portion of lease liability

 

0.7

 

Current maturities of long-term debt

 

0.3

 

Deferred tax liability

 

43.2

 

Lease liabilities, non-current

 

0.8

 

Net assets acquired

 

773.7

 

Goodwill

 

148.0

 

Total net assets acquired

$

921.7

 

The details on the methodology and significant inputs used for fair value of valuation are outlined below.

Goodwill

Preliminary allocation of consideration transferred resulted in $148.0 million in goodwill. The goodwill is amortizable for tax purposes. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition.

Inventory

The fair value of inventory was determined by the market selling price of the inventory, less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts. The fair value of inventory has been stepped up by $1.1 million. This amount has been fully amortized to cost of sales to align with US Salt’s historical inventory turnover.

Property, Plant and Equipment

The fair value of property, plant and equipment of $396.7 million, of which of $310.0 million was salt reserves, was determined using cost and market approaches. The cost approach reflects the amount that would be required to replace the asset to service capacity. This approach was used where there was historical data available. Where there was no historical data available the market approach was used which reflects recent sales of identical or comparable assets.

Intangible Assets

The fair value of acquired intangible assets was $388.0 million. The fair value of customer relationships was determined using the multi-period excess earnings method. Key assumptions under this method are the revenue growth rate, adjusted EBITDA margin, customer attrition rate, discount rate, tax rate and contributory asset charges. The fair value of trade names were determined using the relief from royalty method. Key assumptions under this method are future cash flow estimates, royalty rate and discount rate. The fair value of permits were determined using the income approach method. Key assumptions under this method are future economic benefits and discount rate.

 

 

Estimated Useful Life

Estimated Asset Fair Value

 

 

(in years)

(in millions)

 

Trade names and trademark

15

$

28.0

 

Permits

10

 

100.0

 

Customer relationships

15

 

260.0

 

Identifiable intangible assets, net

 

$

388.0

 

Debt

ContextLogic paid off the outstanding debt and related fees and balances of US Salt on the Closing Date amounting to $209.7 million.

Pro Forma Financial Information

The following unaudited pro forma information presents the net sales and earnings as if the US Salt Acquisition occurred on January 1, 2025. As a result, the unaudited pro forma financial information does not require predecessor and successor periods because the transaction, the related combination of the Company and US Salt, and the new basis applied in accordance with acquisition accounting is reflected for the entirety of the two periods presented.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2025

 

2026

 

 

2025

 

2026

 

 

(in millions)

 

(in millions)

 

 

(in millions)

 

(in millions)

 

Pro forma net sales

$

33.8

 

$

33.6

 

 

$

66.1

 

$

66.0

 

Pro forma net (income) loss

 

7.2

 

 

8.9

 

 

 

(5.9

)

 

16.8

 

Pro forma net (income) attributable to controlling interest

 

7.2

 

 

8.9

 

 

 

(5.9

)

 

16.8

 

Pro forma net loss attributable to noncontrolling interest

 

—

 

 

—

 

 

 

—

 

 

—

 

The unaudited pro forma financial information for the three months and six months ended June 30, 2025 and 2026 include adjustments to reflect the increased tangible asset depreciation, intangible asset amortization, and interest expense related to the new debt assumed. There were no recurring direct transaction costs incurred in connection with the US Salt Acquisition.

The unaudited pro forma financial information does not assume any impacts from net sales, cost or other operating synergies that could be generated as a result of the US Salt Acquisition. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the US Salt Acquisition been consummated on January 1, 2025. The unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved nor are they necessarily indicative of future results of operations.