v3.26.3
Business Combination
 9 Months Ended
Sep. 30, 2026
Business Combination [Abstract]  
Business Combination

5. Business Combination
 

Acquisition of Trak Racer Business

On August 4, 2026, the Company and certain of its wholly owned subsidiaries executed a Business Sale Agreement (“BSA”) to acquire substantially all of the assets of the sim racing business operated under the Trak Racer brand of Masten Enterprises Pty Ltd. and its affiliated entities (“Trak Racer”), which designs, manufactures, distributes and sells racing, flight, motorcycle and other simulation cockpits, chassis, rigs and related peripherals and accessories for gaming enthusiasts, professional sim racers, and commercial customers. The acquisition expands the Company’s sim racing product portfolio within its Gamer and Creator Peripherals segment.

The Trak Racer BSA was consummated on August 4, 2026 (the “Trak Racer Acquisition Date”). As the Trak Racer asset acquisition met the definition of a business, it has been accounted for as a business combination using the acquisition method of accounting. Trak Racer’s results of operations are included in our condensed consolidated statements of operations with effect from August 4, 2026.

The following table summarizes the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed as of the Trak Racer Acquisition Date. We will continue to reflect measurement period adjustments to the purchase price allocation, if any, in the period in which the adjustments are recognized.

 

 

 

Amounts

 

 

 

(In thousands)

 

 

 

 

 

Inventories

 

$

14,951

 

Prepaid expenses and other current assets

 

 

1,122

 

Property and equipment, net

 

 

634

 

Identifiable intangible assets

 

 

8,040

 

Goodwill

 

 

21,901

 

Other liabilities and accrued expenses

 

 

(1,757

)

Purchase consideration, net of cash acquired

 

$

44,891

 

 

 

 

Valuation

 

 

Useful
Life

 

 

 

(In thousands)

 

 

(In years)

 

 

 

 

 

 

 

 

Trade name

 

$

5,500

 

 

 

15

 

Developed technology

 

 

2,300

 

 

 

10

 

Customer relationships

 

 

240

 

 

 

4

 

Total identifiable intangible assets

 

$

8,040

 

 

 

 

The total acquisition purchase consideration consisted of:
 

 

 

Amounts

 

 

 

(In thousands)

 

 

 

 

 

Cash consideration paid

 

$

37,002

 

Deferred consideration payable (1)

 

 

2,998

 

Base purchase price

 

 

40,000

 

Net working capital adjustment (1)

 

 

2,900

 

Contingent consideration payable (2)

 

 

1,991

 

Purchase consideration, net of cash acquired

 

$

44,891

 
(1)
Deferred consideration payable represents the portion of the base purchase price of $40.0 million withheld by the Company at closing under the BSA, payable to the sellers at a later date. The net working capital adjustment represents additional purchase price owed to the sellers because the final net working capital delivered at closing exceeded the estimate provided by the sellers at signing, as determined under the BSA’s purchase price adjustment provisions.
(2)
Refer to Note 3 for further details.

 

The fair value of the working capital related items, as well as the fair value of property and equipment approximated their book values at the Trak Racer Acquisition Date. The fair value of acquired inventories was determined using a market participant approach, based on estimated selling prices less direct selling expenses and a reasonable profit allowance for the selling effort, discounted over

the expected holding period. For inventories where no significant value had been added prior to the acquisition date, cost approximates fair value. The difference between the fair value of the inventories and the book value recorded on the Trak Racer Acquisition Date was $4.7 million, of which we recognized $1.5 million in the condensed consolidated statements of operations, within “cost of revenue”, for the three and nine months ended September 30, 2026, upon the sale of the acquired inventory.

The goodwill of $21.9 million represents the strategic strengthening of our market presence by utilizing Trak Racer’s established brand, its product portfolio and existing market position, that is largely complementary to our Fanatec business. The goodwill is deductible for tax purposes and is assigned to our Gamer and Creator Peripherals reporting unit.

The $8.0 million identifiable intangible assets acquired include trade name of $5.5 million, developed technology of $2.3 million and customer relationships of $0.2 million. The fair values of the identified intangible assets were estimated primarily using the income approach and were based on inputs that are not observable in the market which we consider to be Level 3 inputs. These intangible assets are being amortized over their estimated useful lives, ranging from 4 to 15 years, using the straight-line method of amortization. The identifiable intangible assets acquired are deductible for tax purposes.

The acquisition-related costs incurred in the three and nine months ended September 30, 2026 were $0.7 million and $1.3 million, respectively, and these amounts are primarily reported within sales and general and administrative expenses in the condensed consolidated statements of operations.
 

Unaudited Pro Forma Financial Information

Pro forma information is not included because the effects of the Trak Racer Acquisition were not material to our condensed consolidated statements of operations for the periods presented.