11. Acquisitions

Acquisition of sTec

On September 12, 2013, the Company completed its acquisition of sTec, a provider of enterprise solid-state drives. As a result of the acquisition, sTec was integrated into the Company's HGST subsidiary and became a wholly owned indirect subsidiary of the Company. The purchase price of the acquisition was approximately $336 million, consisting of $325 million which was funded with available cash and $11 million related to the fair value of stock options and RSUs assumed. The Company identified and recorded the assets acquired and liabilities assumed at their estimated fair values at the date of acquisition, and allocated the remaining value of $86 million to goodwill. The values assigned to the acquired assets and liabilities are based on preliminary estimates of fair value available as of the date of this Quarterly Report on Form 10-Q, and may be adjusted as we complete our fair value analyses. Such amounts may be adjusted during the measurement period of up to 12 months from the date of the acquisition as further information becomes available. Any changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in material adjustments to goodwill. The preliminary purchase price allocation was as follows (in millions):



	September 12, 2013
Tangible assets acquired and liabilities assumed:
Cash	$	77
Accounts receivable	12
Inventories	35
Other current assets	14
Property, plant and equipment	44
Other non-current assets	47
Accounts payable	(10		)
Accrued liabilities	(22		)
Other non-current liabilities	(5		)
Intangible assets	58
Goodwill	86
Total	$	336

In-process research and development of $15 million that is included within intangible assets relates to projects associated with next generation PCIe products. The remaining intangible assets of $43 million primarily relates to existing technology that will be amortized to cost of revenue over the weighted average useful life of 3.5 years.

The $86 million of goodwill recognized is primarily attributable to the benefits the Company expects to derive from augmenting HGST's existing solid-state storage capabilities and accelerating its ability to expand its participation in the growing area of enterprise solid-state drives ("SSDs"). None of the goodwill is expected to be deductible for tax purposes. The impact to revenue and net income attributable to sTec was immaterial to the Company’s condensed consolidated financial statements for the three months ended September 27, 2013.

Acquisition of VeloBit

On July 10, 2013, the Company acquired VeloBit, a privately held provider of high-performance storage I/O optimization software. As a result of the acquisition, VeloBit was fully integrated into the Company's HGST subsidiary and became a wholly owned indirect subsidiary of the Company. The acquisition is intended to build on HGST's strategy to enhance the overall value of datacenter storage by integrating HGST SSDs with software. The impact of the acquisition was not material to the Company's condensed consolidated financial statements.