XML 20 R11.htm IDEA: XBRL DOCUMENT
v3.19.3

Business Combination | 9 Months Ended
--- | ---
Sep. 30, 2019
Business Combinations [Abstract] |
Business Combination | 3. Business Combination Summary On April 11, 2018, the Company acquired from ETFS Capital its European exchange-traded commodity, currency and leveraged-and-inverse business for a purchase price consisting of $253,000 in cash and a fixed number of shares of the Company’s capital stock, consisting of (i) 15,250,000 shares of common stock (the “Common Shares”) and (ii) 14,750 shares of Series A Non-Voting Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock. ETFS Capital is subject to a standstill restriction and has registration rights with respect to the Common Shares and shares issuable upon conversion of the Preferred Shares. Also on April 11, 2018 and in connection with the acquisition, the Company entered into a credit agreement, pursuant to which the lenders extended a $200,000 term loan (the “Term Loan”) and made available a $50,000 revolving credit facility (the “Revolver” and, together with the Term Loan, the “Credit Facility”) (Note 12). Purchase Price Allocation The ETFS Acquisition has been accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration paid by the Company to the identifiable assets and liabilities of ETFS based on the estimated fair values as of the closing date of the acquisition. An allocation of the consideration transferred is presented below and includes the Company’s valuation of the fair value of tangible and intangible assets acquired and liabilities assumed. The following table summarizes the allocation of the purchase price as of the acquisition date:
Purchase price |
Preferred Shares issued |  |  | 14,750 |
Conversion ratio |  |  | 1,000 |
Common stock equivalents |  |  | 14,750,000 |
Common Shares issued |  |  | 15,250,000 |
Total shares issued |  |  | 30,000,000 |
WisdomTree stock price (1) |  | $ | 9.00 |
Equity portion of purchase price |  | $ | 270,000 |
Cash portion of purchase price |  |  |  |
Term Loan (Note 12) |  |  | 200,000 |
Cash on hand |  |  | 53,000 |
Purchase price |  |  | 523,000 |
Deferred consideration (Note 11) |  |  | 172,746 |
Total |  | $ | 695,746 |
Allocation of consideration |  |  |  |
Cash and cash equivalents |  |  | 13,687 |
Receivables and other current assets |  |  | 14,069 |
Intangible assets (2) |  |  | 601,247 |
Other current liabilities |  |  | (17,314 | )
Fair value of net assets acquired |  |  | 611,689 |
Goodwill resulting from the ETFS Acquisition (3) |  | $ | 84,057 |
(1) | The closing price of the Company’s common stock on April 10, 2018, the trading day prior to the closing date of the acquisition.
(2) | Represents purchase price allocated to customary advisory agreements. The fair value of the intangible assets was determined using an income approach (discounted cash flow analysis) which relied upon significant unobservable inputs including a revenue growth multiple of 3% to 4% and a weighted average cost of capital of 11.6%. These intangible assets were determined to have an indefinite useful life and are not deductible for tax purposes. A deferred tax liability associated with these intangible assets was not recognized as the intangibles arose in Jersey, a jurisdiction where the Company is subject to a zero percent tax rate.
(3) | Goodwill arising from the ETFS Acquisition represents the value of synergies created from combining the operations of ETFS and the Company. The goodwill is not deductible for tax purposes as the transaction was structured as a stock acquisition occurring in the United Kingdom.
Acquisition-Related Costs During the three and nine months ended September 30, 2019, the Company incurred acquisition-related costs of $190 and $536, respectively, which were predominantly associated with the integration of ETFS and costs incurred in connection with the rationalization of the Company’s product offering in Europe following the ETFS Acquisition . During the three and nine months ended September 30, 2018, the Company incurred acquisition-related costs of $456 and $10,446, respectively, which included professional advisor fees, severance and other compensation costs, a write-off of the Company’s office lease and other integration costs. Operating Results of ETFS The Company’s Consolidated Statements of Operations include the following operating results of ETFS since the acquisition date of April 11, 2018 through September 30, 2018:
Revenues: |  | $37,137
Income before income taxes: |  | $33,496 (including a gain on revaluation of deferred consideration of $ 17,630)
Supplemental Unaudited Pro Forma Financial Information The following table presents unaudited pro forma financial information of the Company as if the ETFS Acquisition had been consummated on January 1, 2018. The information was derived from the historical financial results of the Company and ETFS for all periods presented and was adjusted to give effect to pro forma events that are directly attributable to the acquisition, factually supportable and expected to have a continuing impact on the combined results following the acquisition.
|  | Nine Months Ended September 30, 2018 |
Revenues: |  | $ | 229,674 |
Net income: |  | $ | 48,088 |
Included within the proforma financial information above is a gain on revaluation of deferred consideration $4,670 during the nine months ended September 30, 2018. Significant adjustments to the unaudited pro forma financial information above include the recognition of interest expense associated with the Credit Facility for the periods presented, eliminating acquisition-related costs directly attributable to the acquisition and adjusting consolidated income tax expense based upon the Company’s anticipated normalized consolidated effective tax rate. The unaudited pro forma financial information above is not necessarily indicative of what the combined results of the Company would have been had the acquisition been completed as of January 1, 2018 and does not purport to project the future results of the combined company. In addition, the unaudited pro forma financial information does not reflect any future planned cost savings initiatives following the completion of the acquisition .

X
- 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration