Business Combinations and Asset Purchases

12 Months Ended

Dec. 31, 2023

Business Combinations and Asset Purchases

Business Combinations

Acquisitions in fiscal year 2022

During fiscal year 2022, the Company completed the acquisition of two businesses for aggregate consideration of $13.3 million. Identifiable definite-lived intangible assets, such as core technology, acquired as part of these acquisitions had a weighted average amortization period of 5 years.

Acquisitions in fiscal year 2021

Acquisition of BioLegend, Inc. In fiscal year 2021, the Company completed the acquisition of BioLegend, Inc. (“BioLegend”) and paid an aggregate consideration of $5.7 billion, net of cash acquired of $292.4 million, reflecting working capital and other adjustments (the “Aggregate Consideration”). The Aggregate Consideration was paid in a combination of $3.3 billion in cash and shares of the Company’s common stock having a fair value of approximately $2.6 billion based on the $187.56 per share closing price of the Company's common stock on the New York Stock Exchange on September 17, 2021 (the “Stock Consideration”). The Stock Consideration consisted of 14,066,799 shares of the Company’s common stock. BioLegend is recognized as a leading, global provider of life science antibodies and reagents headquartered in San Diego, California, with approximately 700 employees. The operations for this acquisition is reported within the results of the Company’s Life Sciences segment from the acquisition date. The excess of the purchase price over the fair value of the acquired net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforce acquired, and is not tax deductible. Identifiable definite-lived intangible assets, such as core technology, trade names, customer relationships and clone library, acquired as part of this acquisition had a weighted-average amortization period of 16.3 years.

BioLegend’s revenue and net loss for the period from the acquisition date to January 2, 2022 were $91.7 million and $25.8 million, respectively. The net loss includes $47.0 million of amortization of acquired intangible assets. The following unaudited pro forma information presents the combined financial results for the Company and BioLegend as if the acquisition of BioLegend had been completed at the beginning of fiscal year 2020:


	January 2, 2022
	(In thousands, except per share data)
Pro Forma Statement of Operations Information:
Revenue	$	4,056,122
Income from continuing operations	947,387
Basic earnings per share:
Income from continuing operations	$	7.27
Diluted earnings per share:
Income from continuing operations	$	7.25

The unaudited pro forma information for fiscal year 2021 has been calculated after applying the Company’s accounting policies and the impact of acquisition date fair value adjustments. The fiscal year 2021 unaudited pro forma income from continuing operations was adjusted to exclude approximately $43.2 million of acquisition-related transaction costs and $23.3 million of costs of bridge financing and debt pre-issuance hedges that were recognized in expense during fiscal year 2021. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments, such as fair value adjustment to inventory, increased interest expense on debt obtained to finance the transaction, and increased amortization for the fair value of acquired intangible assets.

The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities. The actual results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

Other acquisitions in 2021. During fiscal year 2021, the Company also completed the acquisition of seven other businesses for aggregate consideration of $1.2 billion. The acquired businesses include Oxford Immunotec Global PLC, a company based in Abingdon, UK with approximately 275 employees, for total consideration of $590.9 million and Nexcelom Bioscience Holdings, LLC, a company based in Lawrence, Massachusetts with approximately 130 employees, for total consideration of $267.3 million, and five other businesses, which were acquired for total consideration of $318.6 million. The

excess of the purchase prices over the fair values of the acquired businesses' net assets represents cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as employee workforces acquired, and has been allocated to goodwill, which is not tax deductible. Identifiable definite-lived intangible assets, such as core technology, trade names, and customer relationships, acquired as part of these acquisitions had a weighted-average amortization period of 12.4 years.

The total purchase price for the acquisitions in fiscal year 2021 has been allocated to the estimated fair value of assets acquired and liabilities assumed as follows:


	Final
	BioLegend		Other
	(In thousands)
Fair value of business combinations:
Cash payments	$	3,336,115	$	1,128,584
Common stock issued	2,638,369		—
Other liability	6,857		2,910
Contingent consideration	—		45,031
Working capital and other adjustments	—		183
Less: cash acquired	(292,377)		(195,010)
Total	$	5,688,964	$	981,698
Identifiable assets acquired and liabilities assumed:
Current assets	$	184,704	$	71,840
Property, plant and equipment	147,200		26,507
Other assets	9,330		15,527
Identifiable intangible assets:
Core technology and clone library	782,400		290,089
Trade names and patents	38,000		39,476
Licenses	8,979		—
Customer relationships and backlog	1,714,800		141,670

Goodwill	3,509,931		545,262
Deferred taxes	(668,919)		(80,923)
Deferred revenue	—		(1,197)
Debt assumed	—		(4,628)
Liabilities assumed	(37,461)		(61,925)
Total	$	5,688,964	$	981,698

The Company does not consider the acquisitions completed during fiscal years 2022 and 2021, with the exception of the BioLegend acquisition, to be material to its consolidated results of operations; therefore, the Company is only presenting pro forma financial information of operations for the BioLegend acquisition. The aggregate revenue and results of operations for acquisitions completed during fiscal years 2022 and 2021 for the fiscal year period from their respective acquisition dates were not material.

The accounting for business combinations requires estimates and judgments as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair values for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, including contingent consideration, are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. Contingent consideration is measured at fair value at the acquisition date, based on the probability that revenue thresholds or product development milestones will be achieved during the earnout period, with changes in the fair value after the acquisition date affecting earnings to the extent it is to be settled in cash. Increases or decreases in the fair value of contingent consideration

liabilities primarily result from changes in the estimated probabilities of achieving revenue thresholds or product development milestones during the earnout period.

As of December 31, 2023, the Company may have to pay contingent consideration, related to acquisitions with open contingency periods, of up to $98.0 million. As of December 31, 2023, the Company has recorded contingent consideration obligations of $40.0 million, of which $11.0 million was recorded in accrued expenses and other current liabilities, and $29.0 million was recorded in long-term liabilities. The expected maximum earnout period for acquisitions with open contingency periods is 7.9 years from December 31, 2023, and the remaining weighted average expected earnout period at December 31, 2023 was 5.0 years.

If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, require acceleration of the amortization expense of definite-lived intangible assets or the recognition of additional contingent consideration which would be recognized as a component of operating expenses from continuing operations.

Total acquisition and divestiture-related costs, included in selling, general and administrative expense in the Company’s consolidated statements of operations, were $69.2 million, $39.8 million and $62.8 million for fiscal years 2023, 2022 and 2021. These amounts included $34.3 million of rebranding expenses in fiscal year 2023 and $20.0 million, $26.5 million and $6.9 million of stock compensation expense related to awards given to BioLegend employees in fiscal years 2023, 2022 and 2021, respectively. Total acquisition and divestiture-related costs, included in interest and other expense, net in the Company’s consolidated statements of operations, were $19.9 million and $18.0 million for fiscal years 2023 and 2021. These amounts included $24.1 million of net foreign exchange loss and $4.2 million interest income related to the sale of the Business in fiscal year 2023, and $5.4 million of net foreign exchange gain and $23.4 million of costs of bridge financing and debt pre-issuance hedges related to the BioLegend acquisition in fiscal year 2021. These acquisition and divestiture-related costs were expensed as incurred.