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Acquisitions | 9 Months Ended
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Mar. 31, 2020
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Fiscal 2020 Acquisitions Acquisition of XMedius On March 9, 2020, we acquired all of the equity interest in XMedius for approximately $73.3 million in an all cash transaction. XMedius is a provider of secure information exchange and unified communication solutions. In accordance with ASC Topic 805 "Business Combinations" (Topic 805), this acquisition was accounted for as a business combination. We believe the acquisition will complement our Customer Experience Management (CEM) and Business Network (BN) platforms. The results of operations of this acquisition have been consolidated with those of OpenText beginning March 9, 2020. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of March 9, 2020, are set forth below:
Current assets | $ | 8,433 |
Non-current tangible assets | 3,792 |
Intangible customer assets | 35,910 |
Intangible technology assets | 11,143 |
Liabilities assumed | (35,842 | )
Total identifiable net assets | 23,436 |
Goodwill | 49,899 |
Net assets acquired | $ | 73,335 |
The goodwill of approximately $49.9 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $0.1 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $18.5 million, which represents our estimate of the fair value of the contractual obligations assumed based on a valuation. In arriving at this fair value, we reduced the acquired company’s original carrying value by approximately $2.7 million. The fair value of current assets acquired includes accounts receivable with a fair value of $6.5 million. The gross amount receivable was $6.7 million, of which $0.2 million is expected to be uncollectible. Acquisition-related costs for XMedius included in "Special charges (recoveries)" in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2020 were $0.8 million, respectively. The finalization of the above purchase price allocation is pending the finalization of the valuation of fair value for the assets acquired and liabilities assumed, including intangible assets and taxation-related balances as well as for potential unrecorded liabilities. We expect to finalize this determination on or before our quarter ending March 31, 2021. Since the date of acquisition, the acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2020. Pro forma results of operations for this acquisition have not been presented because they are not material to our consolidated results of operations. Acquisition of Carbonite On December 24, 2019, we acquired all of the equity interest in Carbonite, a leading provider of cloud-based subscription backup, disaster recovery and endpoint security to small and medium-sized businesses (SMB), consumers, and a wide variety of partners. Total consideration for Carbonite was approximately $1.4 billion paid in cash (inclusive of cash acquired) and inclusive of approximately $0.1 billion, relating to the cash settlement of pre-acquisition stock compensation that was previously accrued but since paid as of March 31, 2020. In accordance with ASC Topic 805, this acquisition was accounted for as a business combination. We believe the acquisition will increase our position in the data protection and endpoint security space, further strengthen our cloud capabilities and open a new route to connect with customers through Carbonite's marquee SMB and consumer channels and products. The results of operations of Carbonite have been consolidated with those of OpenText beginning December 24, 2019. Preliminary Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their preliminary fair values as of December 24, 2019, are set forth below:
Current assets (inclusive of cash acquired of $62.9 million) | $ | 129,779 |
Non-current tangible assets (inclusive of restricted cash acquired of $2.4 million) | 102,936 |
Intangible customer assets | 549,000 |
Intangible technology assets | 291,000 |
Liabilities assumed | (570,656 | )
Total identifiable net assets | 502,059 |
Goodwill | 868,365 |
Net assets acquired | $ | 1,370,424 |
The goodwill of approximately $868.4 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $6.9 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of approximately $171.0 million, which represents our estimate of the fair value of the contractual obligations assumed. In arriving at this fair value, we reduced the acquired company’s original carrying value by approximately $74.7 million. The fair value of current assets acquired includes accounts receivable with a fair value of $45.7 million. The gross amount receivable was $47.1 million of which $1.4 million of this receivable was expected to be uncollectible. Acquisition-related costs for Carbonite included in "Special charges (recoveries)" in the Condensed Consolidated Financial Statements for the three and nine months ended March 31, 2020 were $1.1 million and $8.5 million, respectively. The finalization of the above purchase price allocation is pending the finalization of the valuation of fair value for the assets acquired and liabilities assumed, including intangible assets and taxation-related balances as well as for potential unrecorded liabilities. We expect to finalize this determination on or before our quarter ending December 31, 2020. The amount of Carbonite's revenues and net loss included in our Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2020 is set forth below:
| January 1, 2020 - March 31, 2020 | December 24, 2019 - March 31, 2020
Revenues | $ | 110,351 |  | $ | 119,862 |
Net Loss * | (27,877 | ) | (31,531 | )
* Net loss for the three and nine months ended includes one-time fees of approximately $2.8 million and $5.4 million, respectively, on account of special charges and $48.0 million and $52.2 million, respectively, of amortization charges relating to intangible assets, all net of tax. The unaudited pro forma revenues and net income of the combined entity for the three and nine months ended March 31, 2020 and 2019, respectively, had the acquisition been consummated on July 1, 2018, are set forth below:
| Three Months Ended March 31, |  | Nine Months Ended March 31,
Supplemental Unaudited Pro Forma Information(1) | 2019 |  | 2020 |  | 2019
Total Revenues | $ | 800,361 |  |  | $ | 2,524,726 |  |  | $ | 2,357,397 |
Net Income (2) (3) | 44,984 |  |  | 134,778 |  |  | 35,236 |
(1)Carbonite acquired Webroot Inc. in March 2019. The supplemental pro forma revenues and net income shown above do not include the results of operations of Webroot Inc. for periods prior to the Webroot acquisition date. (2) Included in pro forma net income for the nine months ended March 31, 2019 are approximately $127 million of one-time expenses incurred by Carbonite on account of the acquisition and the related tax effect of approximately $33 million. These one-time expenses included i) approximately $74 million related to the accelerated vesting of historical Carbonite equity awards, ii) approximately $29 million of one time fees, primarily related to transaction costs triggered by the closing of the acquisition, iii) $21 million related to the extinguishment of certain of Carbonite's historical debt and interest rate swaps and iv) approximately $3 million in employee severance costs. (3) Included in pro forma net income for the nine months ended March 31, 2020 and three and nine months ended March 31, 2019 are estimated amortization charges relating to the allocated value of intangible assets. There was no pro forma impact during the three months ended March 31, 2020. The unaudited pro forma financial information in the table above is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented or the results that may be realized in the future. Acquisition of Dynamic Solutions Group Inc. (The Fax Guys) On December 2, 2019, we acquired certain assets and assumed certain liabilities of The Fax Guys, for approximately $5.1 million, of which $1.0 million is currently held back and unpaid in accordance with the terms of the purchase agreement. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements our Enterprise Information Management (EIM) portfolio. The results of operations of The Fax Guys have been consolidated with those of OpenText beginning December 2, 2019. Since the date of acquisition, the acquisition had no significant impact on revenues and net earnings for the three and nine months ended March 31, 2020. Pro forma results of operations for this acquisition have not been presented because they are not material to our consolidated results of operations. Fiscal 2019 Acquisitions Acquisition of Catalyst Repository Systems Inc. On January 31, 2019, we acquired all of the equity interest in Catalyst, a leading provider of eDiscovery that designs, develops and supports market-leading cloud eDiscovery software. Total consideration for Catalyst was approximately $71.4 million, of which $70.8 million was paid in cash and approximately $0.6 million is currently held back and unpaid in accordance with the purchase agreement. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning January 31, 2019. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of January 31, 2019, are set forth below:
Current assets | $ | 9,699 |
Non-current tangible assets | 5,754 |
Intangible customer assets | 30,607 |
Intangible technology assets | 11,658 |
Liabilities assumed | (17,891 | )
Total identifiable net assets | 39,827 |
Goodwill | 31,607 |
Net assets acquired | $ | 71,434 |
The goodwill of approximately $31.6 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $3.1 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $0.8 million, which represents our estimate of the fair value of the contractual obligations assumed based on a valuation. In arriving at this fair value, we reduced the acquired company’s original carrying value by an insignificant amount. The fair value of current assets acquired includes accounts receivable with a fair value of $10.8 million. The gross amount receivable was $11.8 million, of which $1.0 million is expected to be uncollectible. The finalization of the purchase price allocation during the three months ended March 31, 2020 resulted in an adjustment to amounts previously disclosed of approximately $0.6 million. Acquisition of Liaison Technologies, Inc. On December 17, 2018, we acquired all of the equity interest in Liaison, a leading provider of cloud-based business to business integration, for approximately $310.6 million in an all cash transaction. In accordance with Topic 805, this acquisition was accounted for as a business combination. We believe this acquisition complements and extends our EIM portfolio. The results of operations of this acquisition have been consolidated with those of OpenText beginning December 17, 2018. Purchase Price Allocation The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of December 17, 2018, are set forth below:
Current assets | $ | 23,006 |
Non-current tangible assets | 5,168 |
Intangible customer assets | 68,300 |
Intangible technology assets | 107,000 |
Liabilities assumed | (57,265 | )
Total identifiable net assets | 146,209 |
Goodwill | 164,434 |
Net assets acquired | $ | 310,643 |
The goodwill of approximately $164.4 million is primarily attributable to the synergies expected to arise after the acquisition. Of this goodwill, approximately $2.2 million is expected to be deductible for tax purposes. Included in total identifiable net assets is acquired deferred revenue with a fair value of $7.6 million, which represents our estimate of the fair value of the contractual obligations assumed. In arriving at this fair value, we reduced the acquired company’s original carrying value by an insignificant amount. The fair value of current assets acquired includes accounts receivable with a fair value of $20.5 million. The gross amount receivable was $22.2 million, of which $1.7 million is expected to be uncollectible. The finalization of the purchase price allocation during the three months ended December 31, 2019 did not result in any significant changes to the preliminary amounts previously disclosed.

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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 Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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