On August 7, 2023, the Company entered into an Agreement and Plan of Merger with Crocus Technology International Corp., (“Crocus”). Pursuant to the terms and conditions of the Merger Agreement, on October 31, 2023 (the “Closing Date”), the Company acquired all of the outstanding equity interests of Crocus for $412,274 in cash, subject to a working capital adjustment. The acquisition of Crocus is expected to complement and accelerate the Company’s tunnel magnetoresistance sensors roadmap and strengthen its position in the magnetic sensing market.

On September 11, 2023, to fund the ongoing operations of Crocus prior to the closing of the merger, the Company entered into a note purchase agreement with Crocus, wherein the Company agreed to purchase promissory notes up to $7,000. An initial promissory note of $4,000 was issued on September 11, 2023, and an additional promissory note was issued on October 2, 2023 for $3,000. The promissory notes were repaid in full in connection with the closing of the merger and included within the estimated fair value of consideration paid.

The acquisition of Crocus has been accounted for as a business combination. The purchase price for the acquisition is allocated based upon a valuation of the fair values of assets acquired and liabilities assumed. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the acquisition date. Management applied the multi-period excess earnings method under the income approach to estimate the fair value of the completed technology asset and the distributor method under the income approach to estimate the fair value of the customer relationships asset. The fair value of intangible assets was based on estimates and assumptions developed by management. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the fair values of tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill for the acquisition. The Company’s estimates and assumptions in determining the estimated fair values of certain assets and liabilities are subject to change within the measurement period (up to one year from the acquisition date) as a result of additional information obtained with regards to facts and circumstances that existed as of the acquisition date.

The preliminary purchase price allocation is as follows:


Total purchase consideration	$	412,274
Cash		4,155
Inventories		4,208
Accounts receivable		455
Prepaid expenses and other current assets		2,400
Property, plant and equipment		7,683
Right-of-use asset*		9,770
Completed technology**		234,000
Customer relationships**		12,000
Other assets		229
Total identifiable assets acquired		274,900
Accounts payable		(5,134	)
Accrued expenses and other current liabilities		(2,525	)
Long-term debt		(842	)
Lease liability***		(10,390	)
Other long-term liabilities		(3,404	)
Deferred income tax liabilities		(26,876	)
Total identifiable net assets		225,729
Goodwill	$	186,545

*Primarily included in Property, plant and equipment in the unaudited condensed consolidated balance sheets.

**Included in Intangible assets, net in the unaudited condensed consolidated balance sheets.

***Primarily included in Long-term debt in the unaudited condensed consolidated balance sheets.

As of December 29, 2023, the purchase price allocation is preliminary, pending the finalization of the fair value of the intangible assets acquired, certain income tax matters, and the net working capital adjustment.

The goodwill acquired is not deductible for U.S. income tax purposes. The amortization period for the intangible assets acquired is 12 years for completed technology and 15 years for customer relationships. The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to: (i) Crocus’ ability to grow the business with existing and new customers, including leveraging the Company’s customer base; (ii) Crocus’ ability to grow the business through new product introductions; and (iii) cost improvements due to the integration of Crocus’ operations into the Company’s existing infrastructure.

The operating results of Crocus were included in the Company’s statements of operations beginning on October 31, 2023. Revenue and earnings attributable to Crocus since the date of acquisition are not material.

Acquisition-related costs were $8,799 for the three- and nine-month periods ended December 29, 2023, and are included in the selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. Acquisition-related costs for the Crocus acquisition relate to professional fees as well as deal fees.