Note 2 - Acquisition and Divestitures

12 Months Ended

Dec. 31, 2023

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE 2. ACQUISITION

Pala Interactive

On November 1, 2022, Boyd Interactive Gaming Inc. ("Boyd Interactive Inc."), a wholly owned subsidiary of the Company, completed its previously announced acquisition of Pala Interactive and its subsidiaries, including its Canadian subsidiary Pala Canada, pursuant to a Purchase Agreement and Plan of Merger (the "Merger Agreement"), entered into on March 28, 2022, by and among Boyd Interactive Inc., Boyd Phoenix Acquisition, LLC ("Merger Sub"), a wholly owned subsidiary of Boyd Interactive Inc., Boyd Phoenix Canada Inc., a wholly owned subsidiary of Boyd Gaming, Pala Interactive, Pala Canada Holdings, LLC and Shareholder Representative Services LLC as representative of the holders of the membership interests of Pala Interactive. Pursuant to the Merger Agreement, Merger Sub merged with and into Pala Interactive (the "Merger"), with Pala Interactive surviving the Merger. Pala Interactive is now a wholly owned subsidiary of Boyd Interactive Inc.

Boyd Interactive is an innovative online gaming te chnology company that provides proprietary solutions on both a B2B and B2C basis in regulated markets across the United States and Canada. We view this acquisition as an important step forward in our online growth strategy as it provides us with the talent and technology to begin building our regional online casino business. While online casinos are now limited to just a few states, over the long term we believe there is growth and additional profit potential for our Company from online gaming. By owning and operating an online gaming business, we will be able to leverage our nationwide portfolio and extensive customer database to grow in the online casino space. The acquired company is aggregated into our Online segment (See Note 14, Segment Information).

Consideration Transferred

The fair value of the consideration transferred on the date of the Merger Agreement included the purchase price of the net assets transferred. The total gross cash consideration was $175.2 million (with $7.3 million of cash acquired, for total cash paid for acquisitions, net of cash received of $167.9 million).

Status of Purchase Price Allocation

The Company followed the acquisition method of accounting pursuant to FASB ASC Topic 805. For purposes of these consolidated financial statements, we have allocated the purchase price to the assets acquired and the liabilities assumed based on their fair values as determined by management with the assistance from third-party specialists. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed was recorded as goodwill. The Company recognized the assets acquired and liabilities assumed in the acquisition based on fair value estimates as of the date of the Merger. In the second quarter of 2023, the Company finalized its determination of the fair value of the intangible assets acquired, along with the related allocation of goodwill. There was no change in the final determination of fair value of the intangible assets acquired or the related allocation of goodwill from the preliminary values included in the consolidated financial statements at December 31, 2022

The following table summarizes the purchase price allocation as of the acquisition date of November 1, 2022:

*(In thousands)*	*As Recorded*
Current assets	$	10,456
Property and equipment		445
Other assets		740
Intangible assets		77,000
Total acquired assets		88,641

Current liabilities		4,462
Other liabilities		3,007
Total liabilities assumed		7,469
Net identifiable assets acquired		81,172
Goodwill		94,037
Net assets acquired	$	175,209

The following table summarizes the values assigned to acquired property and equipment and estimated useful lives:

	*Useful Lives*
*(In thousands)*	*(in years)*	*As Recorded*
Buildings and improvements	5	$	22
Furniture and equipment	2 - 5		423
Property and equipment acquired		$	445

The following table summarizes the values assigned to acquired intangible assets and weighted average useful lives of definite-lived intangible assets:

	*Useful Lives*
*(In thousands)*	*(in years)*	*As Recorded*
Developed technology	10	$	36,000
B2B relationships	7 - 10		28,000
B2C relationships	12		13,000
Total intangible assets acquired		$	77,000

The goodwill recognized is the excess of the purchase price over the values assigned to the assets acquired and liabilities assumed. All of the goodwill was assigned to reporting units included in the Online segment. All of the goodwill, except $7.8 million allocated to Pala Canada, is expected to be deductible for income tax purposes.

The Company expensed acquisition related costs of $0.7 million and $5.5 million during the years ended December 31, 2023 and 2022, respectively. These costs are included in project development, preopening and writedowns on the consolidated statements of operations.

The revenue and earnings from the Merger are not material for the period subsequent to acquisition through December 31, 2022. The pro-forma revenue and earnings from the Merger assuming all impacts as if it had been completed on January 1, 2022, are not material through December 31, 2022.