Business Acquisitions

6 Months Ended

Jul. 02, 2022

Business Combination and Asset Acquisition [Abstract]

Matrox

On June 3, 2022, the Company acquired Matrox Electronic Systems Ltd. (“Matrox”), a developer of advanced machine vision components and software. Through its acquisition of Matrox, the Company intends to expand its machine vision products and software offerings.

The acquisition was accounted for under the acquisition method of accounting for business combinations. The Company’s total purchase consideration was $878 million comprised of $875 million in cash paid at closing, net of Matrox’s cash on-hand and an additional $3 million of cash that will be paid in the third quarter of 2022.

The Company utilized estimated fair values as of the acquisition date to allocate the total purchase consideration to the identifiable assets acquired and liabilities assumed. The fair value of the net assets acquired was based on several estimates and assumptions, as well as customary valuation techniques, primarily the excess earnings method for customer relationships as well as the relief from royalty method for technology and patent intangible assets. While we believe these estimates provide a reasonable basis to record the net assets acquired, the purchase price allocation is considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. The primary fair value estimates still considered preliminary as of July 2, 2022 include intangible assets and income tax-related items.

The preliminary purchase price allocation to assets acquired and liabilities assumed was as follows (in millions):


Identifiable intangible assets	$	257
Inventory	33

Other assets acquired	13
Deferred tax liabilities	(68)


Other liabilities assumed	(21)
Net assets acquired	$	214
Goodwill on acquisition	664
Total purchase price	$	878

The $664 million of goodwill, which is non-deductible for tax purposes, has been allocated to the EVM segment and principally relates to the planned global expansion and integration of Matrox into the Company’s machine vision offerings.

The preliminary purchase price allocation to identifiable intangible assets acquired was as follows:


	Fair Value (in millions)		Useful Life (in years)
Customer and other relationships	$	196	11
Technology and patents	59		7
Trade names	2		2
Total identifiable intangible assets	$	257

In connection with the acquisition of Matrox, the Company granted $13 million of cash-settled RSUs to certain employees, which are attributable to service to be rendered subsequent to the acquisition and will generally be expensed over a 3-year service period.

The Company has not included unaudited pro forma results, as if Matrox had been acquired as of January 1, 2021, as doing so would not yield materially different results.

The Company incurred approximately $14 million of acquisition-related costs during the second quarter of 2022, primarily related to third-party transaction and advisory fees associated with the Matrox acquisition. These costs are included within Acquisition and integration costs on the Consolidated Statement of Operations.