Acquisitions and Exit Activities

12 Months Ended

Dec. 31, 2020

Acquisitions And Exit Activities [Abstract]

3. Acquisitions and Exit Activities

Acquisition of ETFS

On April 11, 2018, the Company acquired the European exchange-traded commodity, currency and

leveraged-and-inverse

business (“ETFS”) of ETFS Capital Limited (“ETFS Capital”) 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.

The Company also assumed an obligation to pay deferred consideration into perpetuity (Note 12).

This acquisition is referred to throughout the consolidated financial statements as the ETFS Acquisition. The Company’s Consolidated Statements of Operations include the following operating results of ETFS since the acquisition date of April 11, 2018 through December 31, 2018:

Revenues:

$55,882

Income before taxes:

$23,197 (including a gain on revaluation of deferred consideration of $12,220)

Supplemental Unaudited Pro Forma Financial Information

Had the ETFS Acquisition been consummated on January 1, 2018, the Company’s revenues and net income for the year ended December 31, 2018 would have been $297,541 and $37,336, respectively. This information was derived from the historical financial results of the Company and ETFS 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.

Significant adjustments to the unaudited pro forma financial information above include the recognition of interest expense arising from a borrowing to consummate the acquisition, 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 cost savings initiatives following the completion of the acquisition.

Exit Activities

The following table summarizes operating losses recognized by the Company’s wholly-owned subsidiaries that have either been sold or liquidated during reporting periods covered by its consolidated financial statements:


	Years Ended December 31,
	2020		2019		2018
WTAMC	$	428	$	2,786	$	3,925
WisdomTree Japan Inc. (“WTJ”) (1)		—		550		4,520

Total	$	428	$	3,336	$	8,445

(1)	WTJ also recognized an impairment expense of $572 in connection with the termination of its office lease during the year ended December 31, 2019.

Sale of Canadian ETF Business

On February 19, 2020, the Company completed the sale of all the outstanding shares of WTAMC to CI Financial Corp. The Company received CDN $3,720 (USD $2,774) in cash at closing and will receive additional cash consideration of CDN $2,000 to $8,000, depending on the achievement of certain AUM growth targets over the next three years.

During the year ended December 31, 2020, the Company recognized a $2,877 gain on sale which was recorded in other gains and losses, net on the Consolidated Statements of Operations and represents the difference between the minimum cash consideration payable to the Company and the carrying value of WTAMC’s net assets upon disposition. Contingent payments, if any, are recognized by the Company when the contingency is resolved and the gain is realized.

Restructuring of Distribution Strategy in Japan

In July 2018, the Company determined to restructure its distribution strategy in Japan. As a result, WTJ ceased operations and was liquidated in September 2019.

Acquisition and Disposition-Related Costs

During the years ended December 31, 2020, 2019 and 2018, the Company incurred acquisition and disposition-related costs of $416, $902 and $11,454, respectively, in connection with the sale of WTAMC and the ETFS Acquisition.