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Acquisition | 12 Months Ended
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Dec. 31, 2023
Business Combinations [Abstract] |
Acquisition | (5) Acquisitions Atotech On August 17, 2022 (the “Effective Date”), the Company completed the acquisition of Atotech Limited (“Atotech” and such transaction, the “Atotech Acquisition”), through the acquisition of the entire issued share capital of Atotech by Atotech Manufacturing, Inc. (“Bidco”), a Delaware corporation and indirect wholly owned subsidiary of the Company. The Atotech Acquisition was implemented by means of a scheme of arrangement under the laws of Jersey (the “Scheme”) pursuant to the definitive agreement entered into by the Company and Atotech on July 1, 2021 (as amended, the “Implementation Agreement”). Atotech, which the Company operates as the Materials Solutions Division (“MSD”), develops leading process and manufacturing technologies for advanced surface modification, electroless and electrolytic plating, and surface finishing. Applying a comprehensive systems-and-solutions approach, Atotech's portfolio includes chemistry, equipment, software, and services for innovative and high-technology applications in a wide variety of end markets. Atotech further broadens the Company’s capabilities by bringing leadership in critical chemistry solutions for electronics and packaging and specialty industrial applications. On the Effective Date, pursuant to the Scheme and in accordance with the terms and conditions of the Implementation Agreement, Bidco acquired each issued and outstanding ordinary share of Atotech in exchange for per share consideration of $16.20 in cash and 0.0552 of a share of Company common stock. The Company funded the payment of the aggregate cash consideration with a combination of cash on hand and the proceeds from the Term Loan Facility, as defined in Note 15. As a result of the Atotech Acquisition, the Company issued an aggregate of 10.7 shares of Company common stock to the former Atotech shareholders. The purchase price of Atotech consisted of the following:
Cash consideration to Atotech stockholders, net |  | $ | 2,886 |
Value of MKS shares issued |  |  | 1,186 |
Repayment of Atotech senior secured term loans |  |  | 1,545 |
Settlement of accelerated Atotech share-based awards |  |  | 47 |
Total purchase price, net of cash and cash equivalents acquired |  | $ | 5,664 |
Under the acquisition method of accounting, the total purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Atotech based on their fair values as of the Effective Date, except for contract assets and liabilities, which remain at book value in accordance with ASC Topic 606, Revenue from Contracts with Customers. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed was allocated to goodwill and none of this goodwill or intangible assets will be deductible for tax purposes. The Company believes the amount of goodwill relative to identifiable intangible assets relates to several factors, including (1) broadening its position in key electronics and industrial markets to offer complementary solutions, and (2) leveraging component and systems expertise to provide robust solutions to meet its customers’ evolving technology needs. The following table summarizes the allocation of the purchase price to the fair values assigned to assets acquired and liabilities assumed at the Effective Date inclusive of immaterial measurement period adjustments:
Cash and cash equivalents |  | $ | 238 |
Accounts receivable |  |  | 283 |
Inventories |  |  | 244 |
Other current assets |  |  | 104 |
Property, plant and equipment |  |  | 381 |
Intangible assets |  |  | 2,726 |
Goodwill |  |  | 3,054 |
Other assets |  |  | 131 |
Total assets acquired |  |  | 7,161 |
Accounts payable |  |  | 194 |
Other current liabilities |  |  | 166 |
Non-current deferred taxes |  |  | 719 |
Non-current accrued compensation |  |  | 99 |
Other non-current liabilities |  |  | 81 |
Total liabilities assumed |  |  | 1,259 |
Fair value of assets acquired and liabilities assumed |  |  | 5,902 |
Less: Cash and cash equivalents acquired |  |  | (238 | )
Total purchase price, net of cash and cash equivalents acquired |  | $ | 5,664 |
The fair value of the acquired intangible assets was determined using the income approach. In performing these valuations, the key underlying assumptions used included the appropriate discount rates as well as forecasted revenue growth rates, gross profit and operating expenses. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The valuations were based on the information that was available during the one-year measurement period that existed as of the Effective Date and the expectations and assumptions that have been deemed reasonable by the Company's management. The size and breadth of the Atotech Acquisition necessitated the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the fair value of certain tangible and intangible assets acquired and liabilities assumed as of the Effective Date and the related tax impacts of any changes made. The measurement period is now complete. The following table reflects the allocation of the acquired intangible assets and related estimate of useful lives at the Effective Date:
Customer relationships |  | $ | 1,756 |  |  | 11-14 years
Completed technology |  |  | 595 |  |  | 8-9 years
Trade names |  |  | 145 |  |  | 16 years
Backlog |  |  | 40 |  |  | 1.5 years
In-process research and development |  |  | 190 |  |  |
|  | $ | 2,726 |  |  |
The acquired intangible assets are being amortized on a straight-line basis, which approximates the economic use of the assets over their estimated useful lives. Upon completion of the related projects, the Company expects the IPR&D intangible asset to be amortized over its estimated useful life of eight to nine years. During the fourth quarter of 2022, the Company recorded adjustments to balances reported as of, and for the period ended, September 30, 2022, resulting from foreign currency translation of the preliminary allocation of intangible assets and goodwill from the Atotech Acquisition in August 2022 and the related effect on cumulative translation adjustment and deferred tax liabilities. The adjustments recorded were to correct an overstatement of goodwill of $43, intangible assets, net of $56, and non-current deferred tax liabilities of $38, and an understatement of both accumulated OCI and OCI of $61. These adjustments that the Company recorded did not affect net income, earnings per share or the consolidated statements of cash flows. The Company assessed these adjustments in accordance with SEC Staff Accounting Bulletin (“SAB”) No. 99 and SAB No. 108 and determined they were not material to the interim financial statements taken as a whole. Pro Forma Results The following unaudited pro forma financial information presents the combined results of operations of the Company as if the Atotech Acquisition had occurred on January 1, 2021. The unaudited pro forma financial information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the acquisition occurred on the assumed date. In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of the combined Company.
|  | Years Ended December 31, |
|  | 2022 |  |  | 2021 |
Total net revenues |  | $ | 4,450 |  |  | $ | 4,450 |
Net income |  | $ | 197 |  |  | $ | 292 |
The unaudited pro forma information for the year ended December 31, 2022 and 2021 give effect primarily to the following: • applying the Company’s accounting policies; • incremental interest expense related to the Term Loan Facility; • incremental amortization of acquired intangible assets related to the estimated fair value from the purchase price allocation; • the exclusion of inventory step-up amortization in 2022 and the addition of this amortization to 2021; • incremental depreciation of acquired property, plant and equipment related to the estimated fair value from the purchase price allocation; • incremental compensation expense for share-based compensation arrangements; and • the estimated tax impact of the above adjustments. Photon Control On July 15, 2021, the Company completed its acquisition of Photon Control Inc. (“Photon Control”), a Canadian corporation (the “Photon Control Acquisition”), pursuant to a definitive agreement (the “Arrangement Agreement”). Photon Control designs, manufactures and distributes a wide range of optical sensors and systems to measure temperature and position used in semiconductor wafer fabrication. At the effective time of the Photon Control Acquisition and pursuant to the terms and conditions of the Arrangement Agreement, each share of Photon Control’s common stock issued and outstanding as of immediately prior to the effective time of the Photon Control Acquisition, was converted into the right to receive CAD 3.60 per share in cash, without interest and subject to deduction for any required withholding tax. The Company funded the payment of the aggregate consideration with available cash on hand. Photon Control is included in the Company’s PSD segment. The purchase price of Photon Control consisted of the following:
Cash paid for outstanding shares |  | $ | 302 |
Less: Cash and cash equivalents acquired |  |  | (34 | )
Total purchase price, net of cash and cash equivalents acquired |  | $ | 268 |
Under the acquisition method of accounting, the total estimated acquisition consideration is allocated to the acquired tangible and intangible assets and assumed liabilities of Photon Control based on their fair values as of the acquisition date. Any excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill. None of the goodwill or intangible assets will be deductible for tax purposes. The Company believes the amount of goodwill relative to identifiable intangible assets relates to enhancing the Company’s Surround the Wafer® offering by adding optical sensors for temperature control for critical etch and deposition applications in semiconductor wafer fabrication. The following table summarizes the allocation of the purchase price to the fair values assigned to assets acquired and liabilities assumed at the date of the Photon Control Acquisition:
Current assets |  | $ | 51 |
Intangible assets |  |  | 121 |
Goodwill |  |  | 168 |
Other non-current assets |  |  | 9 |
Total assets acquired |  |  | 349 |
Current liabilities |  |  | 14 |
Non-current deferred taxes |  |  | 32 |
Other long-term liabilities |  |  | 1 |
Total liabilities assumed |  |  | 47 |
Fair value of assets acquired and liabilities assumed |  |  | 302 |
Less: Cash and cash equivalents acquired |  |  | (34 | )
Total purchase price, net of cash and cash equivalents acquired |  | $ | 268 |
The acquired intangible assets are being amortized on a straight-line basis, which approximates the economic use of the assets over their estimated useful lives. The following table reflects the allocation of the acquired intangible assets and related estimate of useful lives:
Completed technology |  | $ | 110 |  |  | 9 years
Customer relationships |  |  | 9 |  |  | 10 years
Backlog |  |  | 2 |  |  | 1.5 years
|  | $ | 121 |  |  |
The fair value of the acquired intangible assets was determined using the income approach. In performing these valuations, the key underlying assumptions used included the appropriate discount rates as well as forecasted revenue growth rates, gross profit and operating expenses. Fair value estimates are based on complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The valuations were based on the information that was available as of the acquisition date and the expectations and assumptions that have been deemed reasonable by the Company’s management. There are inherent uncertainties and management judgment required in these determinations. This acquisition resulted in a purchase price that exceeded the estimated fair value of tangible and intangible assets, the excess amount of which was allocated to goodwill. The results of operations of the Photon Control business from the Photon Control Acquisition closing date of July 15, 2021 through December 31, 2021, were not material to the Company's results of operations.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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