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BUSINESS COMBINATION | 3 Months Ended
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Jul. 31, 2025
BUSINESS COMBINATION |
BUSINESS COMBINATION | 4. BUSINESS COMBINATION On June 10, 2024 (“Closing Date”), we acquired 42% of all outstanding common shares of Barnes & Noble Education, as well as control over Barnes & Noble Education through five Immersion-appointed board seats. The total cash consideration transferred was approximately $50.1 million after the $2.5 million Backstop Commitment (as defined in the purchase agreement between Barnes & Noble Education and the Company) and $2.5 million in transaction costs, incurred by Immersion but reimbursed by Barnes & Noble Education. For the fiscal year ended April 30, 2025, Immersion incurred costs related to this acquisition of $1.2 million, inclusive of the expenses reimbursed by Barnes & Noble Education, that were expensed as incurred and recorded in Selling and administrative expenses in the accompanying Condensed Consolidated Statement of Operations. The acquisition aims to expand Immersion's offerings, increase its customer reach, and diversify into the education sector. The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date with the excess recorded as goodwill. The purchase price allocation was finalized during the measurement period and the amounts presented below reflect final measurement period adjustments recorded during the fiscal year ended April 30, 2025. See Note 9. Goodwill and Intangible Assets for additional information. The results of the purchase price allocation below are presented, inclusive of the restatement adjustments. For the impacts of the restatement on the preliminary purchase price allocation, see, Note 20. Restatement of Quarterly Financial Information (Unaudited) as previously disclosed in the Company’s consolidated financial statements for the fiscal year ended April 30, 2025. The following table presents the results of the final purchase price allocation, inclusive of the restatement adjustments (in thousands):
﻿ | Final Purchase Price Allocation |
Assets acquired | ﻿ |
Cash and cash equivalents |  | $ | 14,736 |
Accounts receivable | ﻿ |  | 115,320 |
Merchandise inventories | ﻿ |  | 336,741 |
Textbook rental inventories | ﻿ |  | 5,158 |
Prepaid expenses and other current assets (including $4.8 million in restricted cash) | ﻿ |  | 26,969 |
Property and equipment | ﻿ |  | 118,818 |
Operating lease right-of-use assets | ﻿ |  | 186,180 |
Intangible assets | ﻿ |  | 95,000 |
Other assets noncurrent (including $1.0 million in restricted cash) | ﻿ |  | 11,796 |
Total assets acquired |  | $ | 910,718 |
Liabilities assumed | ﻿ |
Accounts payable | ﻿ |  | 279,456 |
Accrued liabilities | ﻿ |  | 98,974 |
Deferred revenue – current | ﻿ |  | 7,651 |
Operating lease liabilities – current | ﻿ |  | 76,677 |
Deferred income taxes – noncurrent | ﻿ |  | 4,790 |
Operating lease liabilities – noncurrent | ﻿ |  | 141,501 |
Deferred revenue – noncurrent | ﻿ |  | 3,393 |
Other long-term liabilities | ﻿ |  | 12,413 |
Long-term borrowings | ﻿ |  | 101,235 |
Total liabilities assumed |  |  | 726,090 |
Net assets acquired |  | $ | 184,628 |
| ﻿ |
Total consideration transferred |  | $ | 50,133 |
Less: Net assets acquired | ﻿ |  | (184,628 | )
Plus: Noncontrolling interest | ﻿ |  | 203,657 |
Goodwill |  | $ | 69,162 |
Identifiable intangible assets acquired were comprised of the following (in thousands except for estimated useful life):
(in thousands) |  | Amount |  |  | Estimated Life
Trade name |  | $ | 45,000 |  |  | Indefinite
Customer relationships |  |  | 50,000 |  |  | 13 years
Total intangible assets |  | $ | 95,000 |  |  |
Trade name represents Barnes & Noble Education’s right to its trade name on a perpetual, royalty-free basis as it existed on the acquisition Closing Date. Customer relationships consist of distinct values associated with Barnes & Noble Education’s large operating footprint with direct access to students and faculty across a diverse customer base. We used the assistance of a third-party firm to estimate the fair value of the intangible assets acquired. The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods. The key assumptions used to estimate the values of identifiable intangible assets include management’s estimates of future revenue, adjusted for growth, EBITDA margins, royalty rate attrition based on historical data and management's forward-looking expectations. These cash flows were discounted at a rate of 21%, which reflects our cost of equity. The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flow. Goodwill generated from this acquisition is primarily attributed to the value of Barnes & Noble Education’s assembled workforce. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our entire goodwill balance is associated with the Barnes & Noble Education reporting unit. Goodwill is not deductible for tax purposes. We acquired a deferred tax liability of $4.8 million, recorded under Deferred income taxes – noncurrent, as part of this business combination. We also used the assistance of a third-party valuation firm to estimate the fair value of the property and equipment, and inventory acquired. The fair value as of the Closing Date reflects a step-up in basis due to the highly depreciable nature of the property and equipment. No material fair value adjustments for inventory were identified, as there are minimal costs associated with procurement. Most of the net tangible assets were valued at their respective carrying amounts as of the acquisition date, as we believe that these amounts approximate their current fair values. The leases acquired were recorded at their respective fair values as of the acquisition date.

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