Certain Transactions |
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| Certain Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Certain Transactions |
Note 3. Certain Transactions
MakerBot and Ultimaker transaction (“Ultimaker”)
On August 31, 2022, Stratasys completed the merger of MakerBot (previously, a fully owned subsidiary) with Ultimaker, which together formed a new entity under the name Ultimaker. The Company recorded a net gain of $39.1 million from the deconsolidation of MakerBot, representing the difference between the book value of MakerBot’s net assets and the fair value allocated to such net assets in the transaction, as follows:
The Company accounts for its investment in the combined company Ultimaker according to the equity method in accordance with ASC Topic 323, as it has retained the ability to exercise significant influence but does not control the new entity. The Company recognized an equity method investment in a total amount of $105.4 million comprised of the assumed fair value of the MakerBot shares and additional amount invested in cash by the Company, representing a 46.5% share in the new entity.
The allocation of the purchase price (“PPA”) to the underlying net assets acquired and liability assumed resulted in the recognition of intangible assets with a value of $27.4 million, goodwill of $49.3 million and other net assets of $28.7 million. The value assigned to intangible assets is amortized over a period of 4 to 13 years and the related amortization is included under share in net losses (profits) from associated companies. The estimated fair values are based on the information that was available as of August 31, 2022.
As of September 30, 2023
and December 31, 2022 the equity investment in Ultimaker amounted to $88.4 million and
$100.2 million, respectively, which represented the original
investment in Ultimaker, net of share in net losses for the respective periods
(the nine months ended September 30, 2023 and year ended December 31, 2022) in
amounts of $11.8 million and
$5.4 million, respectively. Covestro AG assets acquisition
On April 3, 2023 (the
“Covestro
transaction date”), the Company completed the acquisition of the additive manufacturing materials business of Covestro
AG. Covestro’s
additive manufacturing business is expected to give the Company the ability to accelerate
innovative developments in 3D printing materials and to thereby further grow
adoption of its newest technologies. Also, the Company acquired an IP portfolio comprised of
hundreds of patents and pending patents, including all of the SOMOS™ portfolio.
The
Covestro transaction is reflected in accordance with ASC Topic 805, “Business
Combinations”. The assets acquisition transaction
meets the definition of a business and was accounted for as a “Business Combinations”
transaction, using the acquisition method of accounting with the Company as the
acquirer. The following table summarizes the fair value of the consideration
transferred to Covestro AG for the Covestro transaction:
*Of which $50.0
million was paid on April 3,
2023 and the balance was paid on October 2, 2023.
The fair
value of the ordinary shares issued was determined based on the closing market price
of the Company's ordinary shares on the Covestro transaction date.
In
accordance with ASC Topic 805, the estimated contingent consideration as of the
Covestro transaction date was included in the purchase price. The total
contingent payments could amount to a maximum aggregate amount of up to $37 million.
The
payment will be settled through the issuance of ordinary shares. The estimated
fair value of the contingent consideration is based on management’s assessment
of whether, and at what level, the financial metrics will be achieved, and the
present value factors associated with the timing of the payments. This fair
value measurement is based on significant unobservable inputs in the market and
thus represents a Level 3 measurement within the fair value hierarchy. Changes
in the fair value of contingent consideration will be recorded
in operating expenses. Refer to note 10.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the Covestro transaction date. The estimated fair values are preliminary and based on the information that was available as of April 3, 2023. Thus, the measurements of fair value reflected are subject to changes and such changes could be significant. The preliminary allocation of the purchase price to assets acquired and liabilities assumed is as follows:
The preliminary allocation of the PPA to net assets acquired and
liability assumed resulted in the recognition of intangible assets related to
developed technology, customer relationship, and trade name. These intangible
assets have a useful life of 7 to 10 years. The fair value estimate
of the intangible assets is determined using a variation of the income approach
known as the “Multi-Period Excess Earnings Approach”. This valuation technique
estimates the fair value of an asset based on market participants’ expectations
of the cash flows the asset would generate over its remaining useful life. The net
cash flows were discounted to present value.
Pro
forma information giving effect to the acquisition has not been provided, as the
results would not be material.
Other investments
In addition to the investment in Ultimaker, other investments included under Long-term investments primarily consist of investments in non-marketable equity securities of several companies without readily determinable fair value in which the Company does not have a controlling interest or significant influence. During the nine months ended September 30, 2023 and during 2022, the Company invested a total of $5.4 million and $16.7 million, respectively, in non-marketable equity securities and convertible notes of several companies.
Restructuring
and divestments
During the nine months ended September 30, 2023, the Company initiated certain restructuring activities for some parts
of its operations, as part of aligning the business to the Company's growth
strategy and streamlining the organization for improved efficiency. In
connection with these activities, certain operations were discontinued, and
others were divested. This restructuring resulted in an impairment charge to
fixed assets, inventory write-off, employees related expenses and other
charges. The restructuring activities were
substantially completed by September 30, 2023. The Company recorded during the nine months ended September 30, 2023 restructuring charges of $12.0 million, $2.5 million and $3.9 million under
Cost of sales, Research and development and Selling, general and
administrative, respectively.
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