Business Combinations

6 Months Ended

Jun. 27, 2025

Business Combinations [Abstract]

Business Combinations

3. Business Combinations

On April 8, 2025, the Company acquired 100% of the outstanding stock of Keonn Technologies, S.L. (“Keonn”) pursuant to the terms of a Share Purchase Agreement. At the closing date, Keonn became a wholly-owned subsidiary of the Company. Keonn is a manufacturer of Radio-Frequency Identification (“RFID”) solutions, based in Barcelona, Spain.

The acquisition of Keonn has been accounted for as a business combination under ASC 805, Business Combinations (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed in a business combination are recorded at their fair value as of the acquisition date. The Company’s consolidated financial statements include results of operations for Keonn from the April 8, 2025 acquisition date.

Consideration Transferred

Pursuant to the Share Purchase Agreement, the Company acquired all outstanding equity of Keonn for estimated total purchase consideration of $75.4 million, which consists of:

Cash consideration	$	67,218
Deferred consideration		3,674
Estimated fair value of contingent consideration		4,537
Estimated total purchase consideration	$	75,429

Contingent consideration represents additional payments that the Company may be required to make in the future, between €0 and €20.0 million (approximately $21.9 million as of the acquisition date), depending on the achievement of specified revenue targets by Keonn during fiscal years 2025 through 2027, as well as maintaining certain minimum gross margin targets during the applicable periods. The fair value of the contingent consideration was determined based on a Monte Carlo simulation model in an option pricing framework at the acquisition date, whereby a range of possible scenarios were simulated. Refer to Note 6 for additional information on the valuation assumptions utilized in the Monte Carlo simulation. Deferred consideration is related to a purchase price holdback and customary closing and net working capital adjustments which will be resolved within four years of the acquisition date. The liabilities for contingent and deferred consideration are included in other current and long-term liabilities on the consolidated balance sheets, based on their respective settlement dates. These liabilities are remeasured at the end of each reporting period until related contingencies are resolved.

Allocation of Purchase Price

The purchase price 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. The excess of the purchase price over the fair values of the acquired tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill. The fair values of identifiable intangible assets were based on valuations using an income approach, specifically the multi-period excess earnings method for customer relationships and the relief-from-royalty method for developed technologies and trade name. The process for estimating the fair values of identifiable intangible assets requires the use of significant estimates and assumptions, including revenue growth rates, customer attrition rates, royalty rates, discount rates, technology obsolescence curves, and EBITDA margins. The Company’s estimates and assumptions in determining the estimated fair value 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 to be obtained with regard to facts and circumstances that existed as of the acquisition date.

Based upon the Company’s preliminary valuation, the purchase price for Keonn was allocated as follows (in thousands):

	Purchase Price
	Allocation
Cash	$	4,045
Accounts receivable		1,977
Inventory		5,377
Property, plant and equipment		1,401
Operating lease assets		3,124
Intangible assets		32,326
Goodwill		44,214
Other assets		1,412
Total assets acquired		93,876
Accounts payable		1,593
Operating lease liabilities		3,124
Debt		2,504
Deferred tax liabilities		7,150
Other liabilities		4,076
Total liabilities assumed		18,447
Total assets acquired, net of liabilities assumed		75,429
Less: cash acquired		4,045
Purchase price, net of cash acquired	$	71,384

The fair value of intangible assets for Keonn is comprised of the following:

	Estimated Fair		Amortization
	Value (In thousands)		Period
Developed technologies	$	9,753	9 years
Customer relationships		21,477	9 years
Trade name		1,096	14 years
Total	$	32,326

The preliminary purchase price allocation resulted in $32.3 million of identifiable intangible assets and $44.2 million of goodwill. As the Keonn acquisition was structured as a stock acquisition for income tax purposes, the goodwill is not deductible. The goodwill recorded represents the anticipated incremental value of future cash flows potentially attributable to: (i) Keonn’s ability to grow the business with existing and new customers, including leveraging the Company’s customer base; (ii) Keonn’s ability to grow the business through new product introductions; and (iii) cost improvements due to the integration of Keonn’s operations into the Company’s existing infrastructure.

The operating results of Keonn were included in the Company's results of operations beginning on April 8, 2025. Keonn contributed revenues of $6.2 million and a loss before income taxes of $0.7 million to the Company's operating results for the six months ended June 27, 2025. The loss before income taxes from Keonn for the period from the acquisition date through June 27, 2025 included amortization of purchased intangible assets of $1.8 million.

The pro forma financial information reflecting the operating results of Keonn, as if it had been acquired as of January 1, 2024, would not differ materially from the operating results of the Company as reported for the year ended December 31, 2024.

Acquisition Costs

Acquisition costs are expensed in the periods in which the costs are incurred and included in restructuring, acquisition and related costs in the consolidated statements of operations. Acquisition-related costs for Keonn were $2.1 million for the six months ended June 27, 2025.