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Business Combination | 3 Months Ended
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Mar. 31, 2024
Business Combination |
Business Combination | Note 3 — Business Combination ​ Epiluvac ​ On January 31, 2023, the Company acquired Epiluvac AB, a privately held manufacturer of chemical vapor deposition (CVD) epitaxy systems that enable silicon carbide (SiC) applications in the electric vehicle market. This acquisition is expected to accelerate penetration into the emerging, high-growth SiC equipment market. The results of Epiluvac’s operations have been included in the consolidated financial statements since the date of acquisition. Acquisition date fair value totaled $56.4 million, which included $30.4 million of cash and $26.1 million of contingent consideration. ​ The purchase agreement included performance milestones that, if achieved, could trigger additional payments to the original selling shareholders. The contingent arrangements include payments up to $15.0 million based on the timely completion of certain defined milestones tied to strategic targets, and up to $20.0 million based on the percentage of orders received during the defined Earn-out period. The Earn-out period is four years after the closing date of the acquisition, or earlier if certain conditions are met. ​ The Company estimated the fair value of the contingent consideration by assigning probabilities and discount factors to each of the various defined performance milestones, while using a Monte-Carlo simulation model to determine the most likely outcome for payments to be based on value of orders received. These fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. The discount rate used was 5.54% for the strategic target and order value related contingent payments. The rate was determined based on the nature of the milestone, the risks and uncertainties involved and the time period until the milestone was measured. The determination of the various probabilities and discount factors is highly subjective, requires significant judgment and is influenced by a number of factors, including the adoption of SiC technology. The aggregate fair value of the contingent consideration arrangement at the acquisition date was $26.1 million. While the use of SiC is expected to grow in the near future, it is difficult to predict the rate at which SiC will be adopted by the market and thus would impact the sales of our equipment. ​ The Company updates its estimate of fair value of the contingent consideration each reporting period, utilizing the same methodologies described above. The discount rate used was 5.6% for the strategic target and order value related contingent payments. During the three months ended March 31, 2024, the Company recognized approximately $0.6 million of a reduction to contingent consideration, included within “Other operating expense (income) net” in the Consolidated Statement of Operations. Additionally, during the three months ended March 31, 2024, the Company paid $1.8 million to the original selling shareholders in recognition of a performance milestone having been successfully completed. Total contingent consideration liability as of March 31, 2024 was $21.8 million included within “Other liabilities” on the Consolidated Balance Sheet.

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