XML 57 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Acquisitions
6 Months Ended
Jun. 30, 2014
Business Combinations [Abstract]  
Acquisitions
Acquisitions
In February 2014, we completed the acquisition of Nest Labs, Inc. (Nest), a company whose mission is to reinvent devices in the home such as thermostats and smoke alarms. Prior to this transaction, we had an approximately 12% ownership interest in Nest. The acquisition is expected to enhance Google's suite of products and services and allow Nest to continue to innovate upon devices in the home, making them more useful, intuitive, and thoughtful, and to reach more users in more countries.
Of the total $2.5 billion purchase price and the fair value of our previously held equity interest of $152 million, $51 million was cash acquired, $430 million was attributed to intangible assets, $2.32 billion was attributed to goodwill, and $129 million was attributed to net liabilities assumed. The goodwill of $2.32 billion is primarily attributable to the synergies expected to arise after the acquisition. Goodwill is not expected to be deductible for tax purposes.
This transaction is considered a “step acquisition” under GAAP whereby our ownership interest in Nest held before the acquisition is required to be remeasured to fair value at the date of the acquisition. Such fair value was estimated by using discounted cash flow valuation methodologies. Inputs used in the methodologies primarily included projected future cash flows, discounted at a rate commensurate with the risk involved. The gain of $103 million as a result of remeasurement is included in “Interest and other income, net” on our Consolidated Statement of Income for the six months ended June 30, 2014.
During the six months ended June 30, 2014, we completed other acquisitions and purchases of intangible assets for total cash consideration of approximately $1,003 million. Of the total $1,003 million purchase price and the fair value of our previously held equity interest of $33 million, $62 million was cash acquired, $216 million was attributed to intangible assets, $833 million was attributed to goodwill, and $75 million was attributed to net liabilities assumed. These acquisitions generally enhance the breadth and depth of our expertise in engineering and other functional areas, our technologies, and our product offerings. The amount of goodwill expected to be deductible for tax purposes is approximately $20 million.
Pro forma results of operations for these acquisitions have not been presented because they are not material to the consolidated results of operations, either individually or in aggregate.
For all acquisitions completed during the six months ended June 30, 2014, patents and developed technology have a weighted-average useful life of 4.8 years, customer relationships have a weighted-average useful life of 4.8 years, and trade names and other have a weighted-average useful life of 7.6 years.
In June 2014, Nest entered into an agreement to acquire Dropcam, Inc. (Dropcam), a company that enables consumers and businesses to monitor their homes and offices via video, for approximately $555 million in cash, subject to adjustments. With Dropcam on board, Nest expects to continue to reinvent products that will help shape the future of the connected home. The transaction closed on July 17, 2014. Valuation of the assets acquired and liabilities assumed in the transaction is currently in process and required disclosures will be provided upon the completion of the valuation in the third quarter of 2014.
In June 2014, we entered into an agreement to acquire Skybox Imaging, Inc., a satellite imaging company, for approximately $500 million in cash, subject to adjustments. We expect the acquisition to keep Google Maps accurate with up-to-date imagery and, over time, improve Internet access and disaster relief. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the United States.