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Business Combinations and Acquisition of Non-controlling Interest
12 Months Ended
Oct. 31, 2013
Business Combinations and Acquisition of Non-controlling Interest

Note 3. Business Combinations and Acquisition of Non-controlling Interest

Fiscal 2013 Acquisition of Non-controlling Interest

During the first quarter of fiscal 2013, the Company completed the acquisition of the non-controlling interest in SpringSoft, Inc. (SpringSoft), a company organized under the laws of the Republic of China (Taiwan), in which the remaining 8.4% of outstanding shares of SpringSoft along with the remaining outstanding vested stock options of SpringSoft were exchanged for cash of $44.0 million.

Fiscal 2012 Acquisitions

Acquisition of SpringSoft

On August 3, 2012, the Company’s wholly owned subsidiary incorporated under the laws of the Republic of China entered into a merger agreement pursuant to which it commenced a cash tender offer to acquire SpringSoft at a price of 57.00 New Taiwan Dollars per share. The Company acquired 91.6% of the outstanding shares of SpringSoft on October 1, 2012 for an aggregate cash consideration of $373.5 million. The remaining 8.4% of the outstanding shares along with the fair value of outstanding SpringSoft equity awards were reflected as a Non-controlling Interest (NCI) in the Company’s fiscal 2012 financial statements. This acquisition enables the Company to strengthen and widen its offerings in design, verification and debugging tools.

The Company allocated the total purchase consideration of $426.9 million (including the $44.0 million for the fair value of the non-controlling interest and $9.4 million related to equity awards assumed) to the assets acquired and liabilities assumed based on their respective fair values, including acquired identifiable intangible assets of $107.3 million, resulting in total goodwill of $257.6 million. Identifiable intangible assets are being amortized over three to eight years. Acquisition-related costs directly attributable to the business combination were $6.6 million for fiscal 2012 and were expensed as incurred in the consolidated statements of operations. These costs consisted primarily of employee separation costs and professional services.

Acquisition of Magma Design Automation, Inc. (Magma)

On February 22, 2012, the Company acquired Magma, a chip design software provider, at a per-share price of $7.35. Additionally, the Company assumed unvested restricted stock units (RSUs) and stock options, collectively called “equity awards.” The aggregate purchase price was approximately $550.2 million. This acquisition enables the Company to more rapidly meet the needs of leading-edge semiconductor designers for more sophisticated design tools.

The Company allocated the total purchase consideration of $550.2 million (including $6.8 million related to equity awards assumed) to the assets acquired and liabilities assumed based on their respective fair values at the acquisition date, including acquired identifiable intangible assets of $184.3 million, resulting in total goodwill of $316.3 million. Identifiable intangible assets are being amortized over three to ten years. Acquisition-related costs directly attributable to the business combination totaling $33.5 million for fiscal 2012 were expensed as incurred in the consolidated statements of operations and consist primarily of employee separation costs, contract terminations, professional services, and facilities closure costs.

Other Fiscal 2012 Acquisitions

During fiscal 2012, the Company acquired five other companies, including Emulation & Verification Engineering, S.A. (EVE), for cash and allocated the total purchase consideration of $213.2 million to the assets acquired and liabilities assumed based on their respective fair values, resulting in total goodwill of $118.1 million. Acquired identifiable intangible assets totaling $73.3 million were valued using appropriate valuation methods such as income or cost methods and are being amortized over their respective useful lives ranging from one to eight years. During fiscal 2012, acquisition-related costs totaling $6.8 million were expensed as incurred in the consolidated statements of operations.

Fiscal 2011 Acquisitions

During fiscal 2011, the Company completed two acquisitions for cash and allocated the total purchase consideration of $37.4 million to the assets and liabilities acquired based on their respective fair values at the acquisition date resulting in goodwill of $30.6 million. Acquired identifiable intangible assets of $9.3 million are being amortized over two to ten years.