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Acquisitions
 9 Months Ended
Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
The Company spent $933.2 million in cash, net of cash acquired, to acquire Kern Microtechnik ("Kern") in January 2025 and acquired all outstanding shares of FARO Technologies ("FARO") common stock in July 2025. Kern is a leading manufacturer of high-precision machining and optical inspection solutions supporting a wide range of applications within the medical, semiconductor, research, and space markets. Kern has annual sales of approximately 50 million Euros. Kern is part of EIG. FARO is a leading provider of 3D measurement and imaging solutions, including portable measurement arms, laser scanners and trackers, software solutions, and comprehensive service offerings. FARO has annual sales of approximately $340 million. The transaction was completed following the approval of FARO's stockholders and receipt of all regulatory approvals. FARO is part of EIG.
The following table represents the allocation of the purchase price for the net assets of the FARO and Kern acquisitions based on the estimated fair values at acquisition (in millions):
FAROKernTotal
Property, plant and equipment$23.1 $10.8 $33.9 
Goodwill470.3 60.2 530.5 
Other intangible assets447.9 52.8 500.7 
Convertible debt(1)
(90.0)— (90.0)
Deferred income taxes(71.0)(17.2)(88.2)
Net working capital and other(2)
243.4 6.4 249.8 
Total purchase price$1,023.7 $113.0 $1,136.7 
Less: Acquisition date fair value of cash acquired & convertible debt assumed(194.6)— (194.6)
Less: Acquisition date fair value of contingent payment liability— (8.9)(8.9)
Total cash paid$829.1 $104.1 $933.2 
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(1)Acquired $90.0 million of convertible debt, which was converted and paid in the third quarter of 2025.
(2)Includes $93.0 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.
The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the acquisitions. Kern's design and engineering capabilities complement the Company's existing ultra precision technologies business. FARO's 3D metrology and digital reality solutions expand and enhance the Company's existing ultra precision technologies business.
At September 30, 2025, the purchase price allocated to other intangible assets of $500.7 million consists of $85.4 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $415.3 million of other intangible assets consists of $331.1 million of customer relationships, which are being amortized over a period of 17 to 20 years, and $84.2 million of purchased technology, which is being amortized over a period of 15 to 17 years. Amortization expense for each of the next five years for the 2025 acquisition is expected to approximate $24 million per year.
The Kern acquisition includes an $8.9 million estimated fair value contingent payment due upon Kern achieving certain cumulative revenue and EBITDA targets over the period January 1, 2025 to January 1, 2027. The contingent liability was based on a probabilistic approach using level 3 inputs. At September 30, 2025, there was no change to the estimated fair value of the contingent payment liability.
The Kern and FARO acquisitions had an immaterial impact on reported net sales, net income, and diluted earnings per share for the three and nine months ended September 30, 2025. Had the acquisitions been made at the beginning of 2025 or 2024, pro forma net sales, net income, and diluted earnings per share for the three and nine months ended September 30, 2025 and 2024, would not have been materially different than the amounts reported.
The Company finalized its measurements of tangible and intangible assets and liabilities for its October 2024 acquisition of Virtek Vision International, which had no material impact to the consolidated statement of income and balance sheet. The Company has not finalized its measurements of the accounting for income taxes for its January 2025 acquisition of Kern. The Company is in the process of finalizing the measurement of the intangible assets and tangible assets and liabilities, as well as the associated income tax considerations, for its July 2025 acquisition of FARO. All amounts may change as the Company finalizes the valuations of the assets acquired, liabilities assumed, and intangible assets.