Mergers and Acquisitions

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisition of Silicone Engineering Ltd.

On October 8, 2021, we acquired Silicone Engineering Ltd. (Silicone Engineering), a leading European manufacturer of silicone material solutions based in Blackburn, England, for a combined purchase price of $172.3 million for the company, net of cash acquired, and its facility. As part of the agreement, there is a $4.1 million holdback, upon which we can issue claims against until six months after the close of the acquisition, at which point in time the holdback amount, less any holdback claims, is paid to the previous owners of Silicone Engineering. In April 2022, we paid $1.3 million of the holdback in exchange for a 6-month extension of the holdback period. In October 2022, we paid back the remaining of the holdback, less an immaterial amount for claims. Substantially all of our $190.0 million in borrowings under our existing credit facility in October 2021 were used to fund the transaction, with the remaining amounts being used for general corporate purposes. Silicone Engineering expands our existing advanced silicones platform in our EMS operating segment and provides us a European Center of Excellence to service customers requiring premium silicone solutions for applications in the EV/HEV, industrial, medical and other markets.

The acquisition has been accounted for in accordance with applicable purchase accounting guidance. We recorded goodwill primarily related to the expected synergies from combining operations and the value of Silicone Engineering’s workforce, which is expected to be deductible for tax purposes. We also recorded other intangible assets related to the acquired customer relationships, developed technology, trademarks and trade names and covenants not to compete.

The following table represents the fair values assigned to the acquired assets and liabilities assumed in the transaction. As of the filing date of this Form 10-K, the purchase accounting and purchase price allocation for the Silicone Engineering transaction have been completed.


(Dollars in thousands)	October 8, 2021
Assets
Accounts receivable	$	6,721
Other current assets	1,516
Inventories	1,787
Property, plant and equipment	9,840
Goodwill	107,231
Other intangible assets	73,628
Other long-term assets	850
Total assets	201,573

Liabilities
Accounts payable	3,933
Accrued income taxes payable	1,383
Other accrued liabilities	2,102
Non-current income tax	1,444
Deferred income taxes	20,039
Other long-term liabilities	393
Total liabilities	29,294

Fair value of net assets acquired	$	172,279

The other intangible assets consist of customer relationships valued at $48.9 million, developed technology valued at $9.2 million, trademarks and trade names valued at $13.6 million, a covenant not to compete valued at $1.4 million and an order backlog valued at $0.5 million. The fair value of acquired identified other intangible assets was determined by applying the income approach, using several significant unobservable inputs for projected cash flows as well as a customer attrition rate and a discount rate. These inputs are considered Level 3 under the fair value measurements and disclosure guidance.

At the acquisition date, the weighted average amortization period for the other intangible asset classes was 9.5 years for customer relationships, 3.9 years for developed technology, 11.6 years for trademarks and trade names, 1.6 years for the covenant not to compete and 0.1 years for the order backlog, resulting in amortization expenses ranging from $2.8 million to $5.2 million annually. The estimated annual future amortization expense is $5.2 million for 2022, $4.7 million for 2023, $4.6 million for 2024, $4.3 million for 2025, and $4.2 million for 2026.

In 2022 and 2021, we incurred transaction costs of $0.8 million and $3.9 million, respectively related to the Silicone Engineering acquisition, which were recorded within selling, general and administrative (SG&A) expenses in the consolidated statements of operations.

The results of Silicone Engineering have been included in our consolidated financial statements for the period subsequent to the completion of the acquisition on October 8, 2021, through December 31, 2021. Silicone Engineering’s net sales for that period totaled $8.3 million.

Pro-Forma Financial Information

The following unaudited pro forma financial information presents the combined results of operations of Rogers and Silicone Engineering as if the Silicone Engineering acquisition had occurred on January 1, 2020. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the Silicone Engineering acquisition been completed as of January 1, 2020 and should not be taken as indicative of our future consolidated results of operations.


	For the Years Ended December 31,
(Dollars in thousands)	2021		2020
Net sales	$	973,188	$	835,610
Net income	$	120,082	$	47,460

Terminated Merger Agreement with DuPont

On November 1, 2021, we entered into a definitive merger agreement to be acquired by DuPont de Nemours, Inc. (DuPont) in an all-cash transaction at a price of $277.00 per share of the Company’s capital stock. The merger agreement provided for the acquisition of Rogers Corporation by DuPont through the merger of Cardinalis Merger Sub, Inc., a wholly owned subsidiary of DuPont, with and into Rogers Corporation, with Rogers Corporation surviving the merger as a wholly owned subsidiary of DuPont. Company shareholders approved the merger agreement at a special shareholder meeting held on January 25, 2022. The merger agreement provided both Rogers Corporation and DuPont with a right to terminate the merger agreement if the merger had not closed on or before November 1, 2022. Consummation of the merger was subject to various customary closing conditions, including regulatory approval by the State Administration for Market Regulation of China (SAMR). As of November 1, 2022, the parties had not received regulatory approval from SAMR. On November 1, 2022, the Company received from DuPont a notice of termination of the merger agreement. Pursuant to the terms of the merger agreement, the Company received a regulatory termination fee from DuPont in the amount of $162.5 million, before taxes, and incurred a transaction-related fee of $20.4 million.