Acquisition (Notes) | 3 Months Ended |
Mar. 31, 2014 |
Business Combinations [Abstract] | ' |
Acquisition | ' |
Acquisition |
On February 13, 2014 (Acquisition Date), we acquired DVS Sciences, Inc. (DVS) primarily to broaden our addressable single-cell biology market opportunity and complement our existing product offerings. DVS develops, manufactures, markets, and sells multi-parameter single-cell protein analysis systems and related reagents and data analysis tools. DVS’s principal market is the life sciences research market consisting of drug development companies, government research centers, and universities worldwide. |
The contractual price for the acquisition was $207.5 million, subject to certain adjustments as specified in the merger agreement. The aggregate purchase price was determined to be $199.9 million, as detailed in the table below: |
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| | Estimated Fair Value (in thousands) | | | | |
Cash | | $ | 126,048 | | | | | |
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Issued 1,759,007 shares of Fluidigm common stock | | 76,805 | | | | | |
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Acquisition consideration paid at Acquisition Date | | 202,853 | | | | | |
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Accelerated stock compensation (1) | | (6,690 | ) | | | | |
Estimated fair value of vested Fluidigm equivalent stock options (2) | | 4,039 | | | | | |
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Working capital adjustment | | (269 | ) | | | | |
Aggregate purchase price | | $ | 199,933 | | | | | |
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-1 | As a part of the acquisition, we accelerated vesting of certain DVS stock options and shares of restricted stock, and incurred a $6.7 million expense, based upon the per share consideration paid to holders of shares of DVS common stock as of February 13, 2014. This expense is accounted for as a separate transaction and reflected in the acquisition-related expenses line of the condensed consolidated statements of operations. | | | | | | | |
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-2 | In conjunction with the acquisition, we assumed all outstanding DVS stock options and unvested shares of restricted stock and converted, as of the Acquisition Date, the unvested stock options outstanding under the DVS stock option plan into unvested stock options to purchase approximately 143,000 shares of Fluidigm common stock and approximately 186,000 shares of restricted Fluidigm common stock, retaining the original vesting schedules. The fair value of all converted share-based awards was $14.6 million, of which $4.0 million was attributed to the pre-combination service period and was included in the calculation of purchase price. The remaining fair value will be recognized over the awards’ remaining vesting periods subsequent to the acquisition. The fair value of the Fluidigm equivalent share-based awards as of the Acquisition Date was estimated using the Black-Scholes valuation model. | | | | | | | |
Approximately 885,000 shares of Fluidigm common stock, with a fair value of $38.6 million, representing 50.3030% of the shares otherwise payable to the former stockholders of DVS, was deposited into escrow. These shares comprise a portion of the merger consideration and will be held in escrow to secure indemnification obligations under the merger agreement, if any, for a period of 13 to 18 months following the Acquisition Date, subject to any then pending indemnification claims. |
Prior to the closing of the acquisition, we closed an underwritten public offering of $201.3 million aggregate principal amount of our Notes (See Note 3) to fund a portion of the cash consideration payable in connection with the acquisition. The results of DVS's operations have been included in the condensed consolidated financial statements for the period from February 13, 2014 to March 31, 2014. |
As of March 31, 2014, the accounting for the Acquisition is preliminary due to the ongoing analysis of the developed technology relating to intellectual property rights acquired in connection with the acquisition, associated royalty obligations pursuant to third-party license agreements, and certain tax liabilities. Upon completion of this analysis and during the measurement period, we may record adjustments to the estimated amounts recorded. |
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Net Assets Acquired |
The transaction has been accounted for using the acquisition method of accounting which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the assets acquired and liabilities assumed as of the Acquisition Date: |
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| | Allocation of purchase price (in thousands) | | | | |
Cash and cash equivalents | | $ | 8,405 | | | | | |
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Accounts receivable, net | | 7,698 | | | | | |
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Inventories | | 3,489 | | | | | |
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Prepaid expenses and other current assets | | 1,482 | | | | | |
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Property and equipment, net | | 1,202 | | | | | |
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Developed technology | | 112,000 | | | | | |
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Goodwill | | 104,245 | | | | | |
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Other non-current assets | | 88 | | | | | |
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Total assets acquired | | 238,609 | | | | | |
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Accounts payable | | (1,114 | ) | | | | |
Accrued compensation and related benefits | | (761 | ) | | | | |
Other accrued liabilities | | (1,204 | ) | | | | |
Deferred revenue, current portion | | (1,844 | ) | | | | |
Tax payable | | (45 | ) | | | | |
Deferred tax liability | | (32,079 | ) | | | | |
Deferred revenue, net of current portion | | (1,629 | ) | | | | |
Net assets acquired | | $ | 199,933 | | | | | |
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The following table is a summary of the fair value estimate of the identifiable intangible asset and its useful life: |
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| Useful Life | Estimated Fair Value (in thousands) | | | | | |
Developed technology | 10 years | 112,000 | | | | | | |
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The $104.2 million of goodwill recognized as part of the transaction is attributable primarily to expected synergies and other benefits from the acquisition and is not expected to be deductible for income tax purposes. |
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Acquisition Costs |
Acquisition-related expenses were $10.7 million for the three months ended March 31, 2014 and primarily included accelerated vesting of certain DVS restricted stock and options, and consulting, legal, and investing banking fees. These costs are included within the acquisition-related expenses line of the condensed consolidated statements of operations. |
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Actual and Pro Forma Results |
The amounts of total revenue and net loss of DVS included in our condensed consolidated statement of operations from the Acquisition Date to March 31, 2014 are as follows: |
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| | Acquisition Date to March 31, 2014 (in thousands) | | | | |
Total revenue | | $ | 2,828 | | | | | |
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Net loss | | $ | (1,597 | ) | | | | |
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The unaudited pro forma results presented below include the effects of the DVS acquisition as if it had been consummated as of January 1, 2013. The pro forma results below include adjustments related to depreciation and amortization to reflect the fair value of acquired property and equipment and identifiable intangible assets, stock-based compensation, and the associated income tax impacts. Share-based compensation associated with accelerated vesting and acquisition related costs, which are not expected to occur in future quarters, are not reflected in the pro forma calculation. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it indicative of future operating results. The pro forma information does not include any adjustment for (i) potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition. or (ii) transaction or integration costs relating to the acquisition. |
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| | March 31, 2013 (in thousands) | | March 31, 2014 (in thousands) |
Unaudited pro forma total revenue | | $ | 18,735 | | | $ | 29,509 | |
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Unaudited pro forma net loss | | $ | (10,297 | ) | | $ | (18,986 | ) |