Acquisitions

9 Months Ended

Jun. 30, 2022

Heritage AspenTech

On October 10, 2021, Emerson entered into the Transactions with Heritage AspenTech to contribute the Industrial Software Business comprised of OSI and SSE, along with $6.014 billion in cash, to create New AspenTech. On the Closing Date, Emerson owned 55% of the outstanding common shares of New AspenTech on a fully diluted basis, while the stockholders of Heritage AspenTech owned the remaining 45%.

The acquisition-date fair value of the purchase consideration totaled $11.188 billion, which was determined as follows (in thousands):


Fair value of Heritage AspenTech common stock (66,662,482 common shares)	$	11,085,971
Stock-based compensation awards attributable to pre-combination service	102,305
Total purchase consideration	$	11,188,276

The fair value of the shares of Heritage AspenTech common stock was determined based on the closing market price of Heritage AspenTech common stock on the Closing Date. The Company also replaced Heritage AspenTech equity awards with New AspenTech equity awards. As a result, the portion of the aggregate fair-value of the replacement awards attributable to the pre-combination service period was included in the computation of the fair value of consideration transferred. See Note 14, "Stock-Based Compensation". Of the total cash contribution of $6.014 billion made by Emerson to the Industrial Software Business, $5.846 billion was paid in cash to the holders of Heritage AspenTech common stock at $87.69 per share (on a fully diluted basis), with $168.3 million of cash remaining on New AspenTech’s consolidated and combined balance sheet as of the

Closing Date which is not included in the allocation of purchase consideration above. Additionally, the holders of Heritage AspenTech common stock received 27,998,104 shares of New AspenTech common stock, with an aggregate fair value of $5.240 billion.

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed on the Closing Date, which represent the preliminary fair value estimates as of June 30, 2022, and are subject to subsequent adjustments as the Company obtained additional information during the measurement period and finalized its fair value estimates.


	Amount
	(Dollars in Thousands)
Cash and cash equivalents	$	273,728
Accounts receivable	43,163
Current and non-current contract assets	730,548
Intangible assets	4,390,667
Other net assets acquired	64,342
Total asset acquired (excluding Goodwill)	5,502,448
Accounts payable, accrued expenses, and other current liabilities	53,841
Current and non-current deferred revenue	62,319
Current and non-current borrowings under credit agreement	279,531
Deferred income taxes	1,079,001
Other net liabilities assumed	62,279
Total liabilities assumed	1,536,971
Net identifiable assets acquired	3,965,477
Goodwill	7,222,799
Net assets acquired	$	11,188,276

Of the $4.39 billion of acquired intangible assets, $430 million was assigned to registered trademarks that are not subject to amortization and were recognized at fair value on the acquisition date. The remaining $3.96 billion of acquired intangible assets are being amortized straight-line over their estimated useful lives. The definite-lived intangible assets include acquired developed technology of $1.35 billion (10-year useful life), customer relationships of $2.3 billion (15-year useful life), and backlog of $310 million (3-year useful life).

The $7.2 billion of goodwill was assigned to the Heritage AspenTech segment and is attributable primarily to expected synergies and the assembled workforce of Heritage AspenTech. $34.0 million of the goodwill is expected to be deductible for income tax purposes. As of June 30, 2022, there were no changes in the recognized amounts of goodwill resulting from the acquisition of Heritage AspenTech.

The Company recognized $3.7 million of acquisition and integration planning related fees that was expensed in the current period. These fees are included in operating expenses of the consolidated and combined statement of operations.

Heritage AspenTech’s revenue and earnings included in the Company’s consolidated and combined statement of operations from the acquisition date to the reporting period ending June 30, 2022 are $173.8 million and $71.8 million, respectively.

Pro forma Financial Information (Unaudited)

The following unaudited pro forma consolidated financial results of operations are presented as if the Heritage AspenTech acquisition occurred on October 1, 2020. The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time.


	Nine-Month Period Ended June 30, 2022		Year Ended September 30, 2021
Total revenue	$	819,098	$	1,031,065
Net income (loss)	$	18,193	$	(55,410)

These amounts have been calculated and adjusted to reflect Heritage AspenTech’s application of the Company’s accounting policies effective October 1, 2020, together with the consequential tax effects. The 2022 and 2021 pro forma results were adjusted to include new amortization expenses resulting from intangibles identified as part of the estimated purchase price allocation of $244.8 million and $391.7 million, respectively.

OSI Inc.

On October 1, 2020, the Industrial Software Business completed the acquisition of OSI Inc. for approximately $1.589 billion net of cash acquired. The Industrial Software Business recognized goodwill of $967.4 million (none of which is expected to be tax deductible) and identifiable intangible assets of $783.4 million, primarily technology, customer relationships, and trademarks with a weighted-average useful life of approximately 11 years.

The purchase price of the OSI Inc. acquisition was allocated to assets and liabilities as follows:


Accounts receivable	$	24,782
Current contract assets	41,454
Other current assets	3,576
Property, equipment and leasehold improvements	7,153
Intangible assets	783,400
Operating lease right-of-use assets and other	28,182
Total assets acquired (excluding Goodwill)	888,547
Accounts payable	1,321
Current contract liabilities	24,041
Accrued expenses and other current liabilities	11,885
Operating lease liability	28,388
Deferred income taxes	192,592
Non-current contract liabilities	7,701
Other non-current liabilities	1,200
Total liabilities assumed	267,128
Net identifiable assets acquired	621,419
Goodwill	967,383
Net assets acquired	$	1,588,802

OSI Inc.’s revenue and earnings included in the Company’s consolidated and combined income statement from the acquisition date to the first reporting period ending on September 30, 2021 were $173.3 million and a net loss of $(46.4) million, respectively. The results included first-year pretax acquisition accounting charges related to backlog and deferred revenue of $30.4 million and $13.7 million, respectively. Results also included amortization of technology, customer relationships, and trademarks of $66.5 million.