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ACQUISITIONS

3 Months Ended

Mar. 31, 2023

ACQUISITIONS

ACQUISITIONS

3.   ACQUISITIONS

On May 2, 2022, the Company purchased ErisX, which was subsequently rebranded to Cboe Digital. Cboe Digital operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearinghouse. Ownership of Cboe Digital allows the Company to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency. Eris Innovations Holdings, LLC (formerly Eris Exchange Holdings, LLC) was not a part of this transaction and the Company retains its minority equity ownership interest in Eris Innovations Holdings, LLC. Of the acquisition’s purchase price, $460.9 million was allocated to goodwill, $95.0 million was allocated to intangible assets, and $8.4 million was allocated to working capital. Prior to signing the acquisition agreement, the Company held a minority investment in ErisX. As a result of the acquisition of the remaining portion of ErisX, the Company recognized a $7.5 million gain, reflecting the change in fair value of the minority investment in ErisX as a result of the acquisition, which is included in other income (expense), net in the condensed consolidated statement of income for the year ended December 31, 2022. See below for further discussion of intangible assets acquired. Additionally, the Company performed impairment testing during the year ended December 31, 2022, as there were market events that indicated it was more likely than not that these assets were impaired, resulting in the recognition of impairment charges to goodwill. See Note 8 (“Goodwill, Intangible Assets, net, and Digital Assets Held”) for more information on the impairments.

On June 1, 2022, the Company purchased NEO, which was subsequently rebranded to Cboe Canada. Cboe Canada is a fintech organization that is comprised of a fully registered Canadian securities exchange with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform. With ownership of Cboe Canada, the Company expects to further grow Canada as a hub for global equities trading, in addition to MATCHNow, the ATS acquired by the Company in 2020. As of December 31, 2022, the allocation of purchase price includes adjustments within the measurement period resulting in a decrease to intangible assets, an increase in net working capital and a reduction in contingent consideration. See the table below for more information about the adjustments made to the Cboe Canada (formerly NEO) purchase price allocation. Additional adjustments to the provisional values may occur before the end of the measurement period, a period not to exceed twelve months from the acquisition date, which may include tax and other estimates which will be recorded in the reporting period that the adjustment amounts are determined. See below for further discussion of intangible assets acquired and Note 13 (“Fair Value Measurement”) for the impact of the allocation adjustments on the Company’s financial liabilities.

The following table presents the details of the adjustments made to the initial purchase price allocation for the Cboe Canada (formerly NEO) acquisition during the year ended December 31, 2022 (in millions):

​	​	​	​	​	​	​	​	​	​
​	​	Initial purchase		​	Total		​	Adjusted purchase
​		price allocation			adjustments			price allocation
Goodwill	​	$	132.4	​	$	0.2	​	$	132.6
Intangible assets	​	​	130.1	​	​	(61.0)	​	​	69.1
Net working capital	​	​	(6.9)	​	​	16.6	​	​	9.7
Contingent consideration	​	​	(54.3)	​	​	44.2	​	​	(10.1)

​

​

The following table presents the details of intangible assets as of the acquisition date, inclusive of purchase price adjustments outlined above (in millions, except as stated). All acquired intangible assets with finite lives are amortized using the straight-line method.

​	​	​	​	​	​	​	​	​	​	​
​	​	Cboe Digital		​	Useful Life (Years)	​	Cboe Canada		​	Useful Life (Years)
Trading registrations and licenses	​	$	25.0	​	Indefinite	​	$	15.1	​	Indefinite
Customer relationships	​	​	—	​	​	​	​	37.4	​	15
Technology	​	​	70.0	​	10	​	​	16.2	​	7
Trademarks and tradenames	​	​	—	​	​	​	​	0.4	​	5
Total identifiable intangible assets	​	$	95.0	​	​	​	$	69.1	​	​

​

Acquisition-related costs relate to acquisitions and other strategic opportunities. The Company expensed $6.4 million of acquisition-related costs during the three months ended March 31, 2023, all of which related to professional fees and other expenses. The Company expensed $2.0 million of acquisition-related costs during the three months ended March 31, 2022, all of which related to professional fees and other expenses. These acquisition-related expenses are included in acquisition-related costs in the condensed consolidated statements of income.

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- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

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-Name Accounting Standards Codification
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