Acquisitions | 3. Acquisitions Logistyx Acquisition On March 2, 2022, E2open, LLC acquired all of the issued and outstanding membership interests of Logistyx for a purchase price of $ 185 million, with an estimated fair value of $ 183.4 million, including $ 90 million paid in cash at closing (Logistyx Acquisition). An additional $ 95 million, which was subject to standard working capital adjustments and other contractual provisions, was paid in two installments on May 31, 2022 and September 1, 2022. We had the option to finance the remaining payments, at our discretion, through cash or a combination of cash and Class A Common Stock. The May 31, 2022 payment of $ 37.4 million was paid in cash. On August 15, 2022, E2open, LLC and the sellers of Logistyx agreed to extend the final payment to September 1, 2022 allowing both parties to finalize working capital adjustments and other contractual provisions. On September 1, 2022, E2open, LLC made a cash payment of $ 54.0 million to Logistyx as the final installment payment for the Logistyx Acquisition which reflected a working capital adjustment of $ 3.6 million. The Logistyx sellers disputed the working capital adjustment pursuant to the terms of the Membership Interest Purchase Agreement. During October 2022, the parties agreed to a working capital adjustment of $ 2.6 million. The additional payment for working capital was made to Logistyx on December 5, 2022. The Logistyx Acquisition was accounted for as a business combination under ASC 805, Business Combinations. The following summarizes the consideration paid for the Logistyx Acquisition. ($ in thousands) Fair Value Cash consideration to Logistyx at fair value $ 153,090 Cash repayment of debt 29,777 Cash paid for seller transaction costs 489 Working capital adjustment ( 2,550 ) Estimated consideration paid for the Logistyx Acquisition $ 180,806 We recorded the preliminary allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of March 2, 2022. The preliminary purchase price allocation is as follows: ($ in thousands) Preliminary Purchase Price Allocation Adjustments (3) Updated Preliminary Purchase Price Allocation Cash and cash equivalents $ 1,563 $ — $ 1,563 Account receivable, net 5,332 — 5,332 Other current assets 3,335 — 3,335 Property and equipment, net 144 — 144 Intangible assets 67,200 ( 400 ) 66,800 Goodwill (1) 125,896 ( 2,150 ) 123,746 Non-current assets 619 — 619 Accounts payable ( 5,897 ) — ( 5,897 ) Current liabilities ( 3,931 ) — ( 3,931 ) Deferred revenue (2) ( 10,747 ) — ( 10,747 ) Non-current liabilities ( 158 ) — ( 158 ) Total assets acquired and liabilities assumed $ 183,356 $ ( 2,550 ) $ 180,806 (1) Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable net assets acquired in the Logistyx Acquisition. Goodwill associated with the Logistyx Acquisition is deductible for tax purposes at the U.S. entity level. (2) The deferred revenue was recorded under ASC 606 in accordance with ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers; therefore, a reduction in deferred revenues related to the estimated fair values of the acquired deferred revenues was not required. (3) The adjustments primarily relate to the $ 0.4 million change in fair value of the intangible assets due to a change in the deferred revenue and $ 2.6 million working capital adjustment. The fair value of the intangible assets is as follows: ($ in thousands) Useful Lives Fair Value Trade name 1 $ 500 Developed technology (1) 6.4 33,500 Client relationships (2) 13 32,000 Backlog (3) 2.5 800 Total intangible assets $ 66,800 (1) The developed technology represents technology developed by Logistyx and acquired by E2open, which was valued using the multi-period excess earnings method, a form of the income approach considering technology migration. (2) The client relationships represent the existing client relationships of Logistyx and acquired by E2open that was estimated by applying the with-and-without methodology, a form of the income approach. (3) The backlog represents the present value of future cash flows from contracts with clients where service has not been performed and billing has not occurred. The preliminary allocation of the purchase price is based on preliminary valuations performed to determine the fair value of the net assets as of March 2, 2022. This allocation is subject to revision as the assessment is based on preliminary information subject to refinement. We incu rred $ 4.0 million ($ 0.7 million as o f February 28, 2022) of expenses directly related to the Logistyx Acquisition through November 30, 2022 which are included in acquisition-related expense in the Condensed Consolidated Statements of Operations. Included in these expenses were $ 1.6 million acquisition-related advisory fees which were incurred on March 2, 2022. At the closing of the Logistyx Acquisition, we paid $ 0.5 million of acquisition-related advisory fees and other expenses related to the Logistyx Acquisition on behalf of Logistyx. These expenses were part of the purchase price consideration and not recognized as expense in our or Logistyx's Condensed Consolidated Statements of Operations. BluJay Acquisition On May 27, 2021, we entered into a Purchase Agreement with the BluJay Sellers to acquire all of the outstanding equity of BluJay. On September 1, 2021 (Acquisition Date), we completed the acquisition of BluJay (BluJay Acquisition). The BluJay Acquisition was accounted for as a business combination under ASC 805, Business Combinations. The cash consideration in the BluJay Acquisition was provided by $ 380.0 million in proceeds from the issuance of an incremental term loan, $ 300.0 million in PIPE financing from institutional investors for the purchase of an aggregate of 28,909,022 shares of our Class A Common Stock and cash on hand. The following summarizes the consideration paid for the BluJay Acquisition. ($ in thousands) Fair Value Equity consideration paid to BluJay (1) $ 730,854 Cash consideration to BluJay 350,658 Preference share consideration paid to BluJay (2) 86,190 Cash repayment of debt 334,483 Cash paid for seller transaction costs 26,686 Estimated consideration paid for the BluJay Acquisition $ 1,528,871 (1) Equity consideration paid to BluJay equity holders consisted of the following: (In thousands, except per share data) Consideration Common shares subject to sales restriction 72,383 Fair value per share $ 10.097 Equity consideration paid to BluJay $ 730,854 (2) Represents the liability and dividends owed related to the BluJay preference shares at the date of the acquisition. We recorded the allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the Acquisition Date and adjusted certain items as noted below. The final purchase price allocation is as follows: ($ in thousands) Preliminary Purchase Price Allocation Adjustments (4) Final Purchase Price Allocation Cash and cash equivalents $ 23,773 $ — $ 23,773 Account receivable, net 33,834 ( 12 ) 33,822 Other current assets 10,352 865 11,217 Property and equipment, net 6,503 — 6,503 Operating lease right-of-use assets 9,018 — 9,018 Intangible assets 484,800 — 484,800 Goodwill (1) 1,152,084 ( 2,218 ) 1,149,866 Non-current assets 2,200 ( 2,016 ) 184 Accounts payable ( 11,773 ) 143 ( 11,630 ) Current liabilities (2) ( 33,530 ) 10,652 ( 22,878 ) Deferred revenue (3) ( 39,283 ) — ( 39,283 ) Deferred taxes ( 101,936 ) ( 7,414 ) ( 109,350 ) Non-current liabilities ( 7,171 ) — ( 7,171 ) Total assets acquired and liabilities assumed $ 1,528,871 $ — $ 1,528,871 (1) Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable net assets acquired in the BluJay Acquisition. Goodwill associated with the BluJay Acquisition is not deductible for tax purposes. (2) Current liabilities include a $ 2.7 million deferred acquisition liability that was acquired related to a prior acquisition by BluJay. The deferred acquisition liability was a fixed amount that was determined at the closing of the acquisition and payable after a certain period of time. The deferred acquisition liability was paid in December 2021. (3) The deferred revenue was recorded under ASC 606 in accordance with ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers; therefore, a reduction in deferred revenues related to the estimated fair values of the acquired deferred revenues was not required. (4) The adjustments primarily relate to the jurisdictional netting of income taxes, impact of a tax rate change on the deferred balance and the reinstatement of income tax receivables along with the true-up of accrued liabilities. The fair value of the intangible assets is as follows: ($ in thousands) Useful Lives Fair Value Trade name 1 $ 3,800 Developed technology (1) 5.9 301,000 Client relationships (2) 3 180,000 Total intangible assets $ 484,800 (1) The developed technology represents technology developed by BluJay and acquired by E2open, which was valued using the multi-period excess earnings method, a form of the income approach considering technology migration. (2) The client relationships represent the existing client relationships of BluJay and acquired by E2open that was estimated by applying the with-and-without methodology, a form of the income approach. We incurred $ 33.7 million of expenses directly related to the BluJay Acquisition during the year ended February 28, 2022, which are included in acquisition-related expenses in the Condensed Consolidated Statements of Operations. Included in these expenses were $ 13.4 million acquisition-related advisory fees which were incurred on the Acquisition Date. In addition, we paid $ 10.4 million of debt issuance costs associated with the $ 380.0 million incremental term loan on the Acquisition Date which were capitalized and recorded as a reduction of the outstanding debt balances. At the closing of the BluJay Acquisition, we paid $ 7.1 million in fees related to the $ 300.0 million PIPE financing which were recorded as a reduction to the proceeds from the issuance of Class A Common Stock in the Condensed Consolidated Statements of Stockholders' Equity. Additionally, we paid $ 26.7 million of acquisition-related advisory fees and other expenses related to the BluJay Acquisition on behalf of BluJay. These expenses were part of the purchase price consideration and not recognized as expense in our or BluJay's Condensed Consolidated Statements of Operations. Additionally, the Investor Rights Agreement was amended and restated to add certain of BluJay's existing stockholders as parties, including certain affiliates of Francisco Partners and Temasek. The Investor Rights Agreement provides Francisco Partners and Temasek the right to nominate one member each to our board of directors. Mr. Deep Shah, nominated by Francisco Partners, and Mr. Martin Fichtner, nominated by Temasek, became new directors on September 1, 2021 . Unaudited Pro Forma Operating Results The following unaudited pro forma combined financial information presents the results of operations as if the BluJay and Logistyx acquisitions happened as of March 1, 2021. The unaudited pro forma results may not necessarily reflect actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma results reflect the step-up amortization adjustments for the fair value of intangible assets acquired, the elimination of historical interest expense incurred by BluJay and Logistyx on its debt and the incurrence of interest expense related to the issuance of debt in connection with the BluJay and Logistyx acquisitions, transaction expenses, nonrecurring post-combination compensation expense and the related adjustment to the income tax provision. Three Months Ended Nine Months Ended ($ in millions) November 30, 2021 November 30, 2021 Total revenue $ 147.5 $ 407.4 Net loss ( 69.0 ) ( 326.6 ) Less: Net loss attributable to noncontrolling interest ( 7.2 ) ( 35.9 ) Net loss attributable to E2open Parent Holdings, Inc. $ ( 61.8 ) $ ( 290.7 ) |