Acquisitions

We account for business combinations in accordance with ASC 805. This standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard prescribe, among other things, the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration) and the exclusion of transaction and acquisition related restructuring costs from acquisition accounting.

On January 18, 2017, we closed the acquisition of all of the issued and outstanding common shares of DEQ Systems Corp. ("DEQ"), which was announced in the third quarter of 2016. DEQ was integrated into our Gaming business segment and expands the depth and breadth of our table product portfolio.

On April 7, 2017, we completed the acquisition of all of the issued and outstanding capital stock of privately held mobile and social game company Spicerack, which expands our existing portfolio of social casino games and our customer base. Spicerack was integrated into our Interactive business segment.

On April 25, 2017, we completed the acquisition of all of the issued and outstanding membership interests of privately held lottery sales force and retail performance technology and consulting services company Lapis Software Associates, LLC (“Lapis”), which expands our suite of value-added retail lottery products. Lapis was integrated into our Lottery business segment.

On July 7, 2017, we completed the acquisition of all of the issued and outstanding capital shares of privately held U.K.-based mobile and interactive casino content developer Red7, which expands our existing portfolio of mobile and interactive game titles. Red7 was integrated into our Interactive business segment.

The following table summarizes an aggregate disclosure related to business acquisitions completed in 2017:



	Total Consideration		Cash paid, net of cash acquired		Contingent Consideration ⁽¹⁾		Allocation of purchase price to Intangible assets, net ⁽²⁾		Weighted average useful life of acquired intangible assets	Excess purchase price allocated to Goodwill
Aggregate total	$	66.0	$	57.7	$	7.5	$	56.4	8.3 Years	$	14.6

¹Contingent consideration as determined by fair value and included in the consideration transferred, with no material changes subsequent to the initial measurement.

²Intangible assets primarily consist of technology-based and customer relationship intangible assets. The fair value of these intangible assets was determined using a combination of a relief from royalty method and the excess earnings method using Level 3 in the hierarchy as established by ASC 820. The discount rates and royalty rates used in the valuation analysis ranged between 9% and 20% and 1% and 16%, respectively.

The contingent consideration value is primarily based on reaching certain earnings-based metrics, with a maximum payout of up to $38.5 million. The goodwill recognized relates to the Spicerack acquisition, and the factors contributing to the recognition of goodwill are based on expected synergies resulting from this acquisition, including the expansion of the customer base. None of the resultant goodwill is deductible for income tax purposes.

The amount of revenue and earnings associated with the above acquisitions and since the acquisition date included in the consolidated financial statements were less than 1.0% for all of the periods presented, thus not significant to our consolidated financial statements.

Acquisition of NYX Gaming Group Limited

During the third quarter of 2017, we entered into a definitive agreement to acquire all of the issued and outstanding ordinary shares of NYX, for CAD $2.40 per share, in cash and without interest. Cash paid to acquire ordinary shares and other securities (inclusive of $91.9 million paid during the fourth quarter of 2017 to acquire NYX ordinary shares and other securities) and to redeem NYX's outstanding debt was $665.8 million. NYX is a leading digital gaming software supplier for interactive, social and mobile gaming worldwide, and was listed on the Toronto Stock Exchange - Venture Exchange under the ticker symbol “NYX.”

During the fourth quarter of 2017, we acquired NYX ordinary shares and other securities, effectively resulting in a non-controlling interest of 36% of NYX (refer to Note 13). Subsequent to December 31, 2017 and upon the transaction closing on January 5, 2018, we acquired the remaining interest in NYX.

We are in the process of completing the preliminary purchase price accounting. The primary intangible assets that have been preliminarily identified are: customer relationships, intellectual property and brand names, which are in the process of being valued using a combination of a relief from royalty method and the excess earnings method based primarily on Level 3 inputs in the hierarchy as established by ASC 820. Both the valuation analysis and opening balance sheet procedures are ongoing and incomplete at this time.

Acquisition of Tech Art

On January 23, 2018, we completed the acquisition of all of the issued and outstanding common stock of privately held Tech Art for $9.6 million cash consideration. Tech Art is expected to be integrated into our Gaming business segment, expanding the depth and breadth of our table product portfolio. We have not commenced the purchase price accounting analysis, however we expect that substantially all of the purchase price will be allocated to acquired intellectual property.