Quarterly report pursuant to Section 13 or 15(d)

Business Combination

v3.22.1
Business Combination
3 Months Ended
Mar. 31, 2022
Business Combinations [Abstract]  
Business Combination

Note 2. Business Combination

Danimer Catalytic Technologies

On August 11, 2021, we acquired all of the outstanding shares of Novomer, Inc., a privately held company, in exchange for $153.9 million in cash, gross of cash acquired, subject to certain customary adjustments as set forth in the merger agreement. We also entered into employment or consulting agreements with, and granted stock options to, certain key employees and consultants of Novomer Inc. We have also recorded contingent purchase price payable that will be payable to the sellers upon our collection of an income tax refund receivable.

Danimer Catalytic Technologies uses its proprietary thermal catalytic conversion process to produce a unique type of PHA, referred to under its brand name as Rinnovo, that can be incorporated into some of our products as a complement to our existing PHA polymer at reduced cost.

The table below sets forth the preliminary fair values of assets acquired and liabilities assumed including the adjustments recorded in the three months ended March 31, 2022:

 

 

December 31,

 

 

 

 

 

March 31,

 

(in thousands)

 

2021

 

 

Adjustments

 

 

2022

 

Cash and restricted cash

 

$

2,741

 

 

$

-

 

 

$

2,741

 

Property, plant and equipment

 

 

18,622

 

 

 

-

 

 

 

18,622

 

Other assets acquired

 

 

2,302

 

 

 

-

 

 

 

2,302

 

Right-of-use asset

 

 

2,715

 

 

 

-

 

 

 

2,715

 

Acquired technology

 

 

84,400

 

 

 

-

 

 

 

84,400

 

Goodwill

 

 

62,649

 

 

 

14

 

 

 

62,663

 

Deferred tax liability

 

 

(14,246

)

 

 

-

 

 

 

(14,246

)

Lease liability

 

 

(2,759

)

 

 

-

 

 

 

(2,759

)

Liabilities assumed

 

 

(2,004

)

 

 

(14

)

 

 

(2,018

)

Contingent purchase price payable

 

 

(500

)

 

 

-

 

 

 

(500

)

Total preliminary purchase price

 

$

153,920

 

 

$

-

 

 

$

153,920

 

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is based on currently available information and is considered preliminary. The final accounting for the business combination may differ materially from that presented above as future events may provide additional information about the realizability of other assets or the existence of other liabilities at the acquisition date. In addition, income tax returns for 2021 have yet to be filed, and we are validating certain state income tax allocations, which could result in changes to acquisition-date deferred tax liability.

The preliminary estimated goodwill is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition and the value of its existing workforce. The goodwill is not deductible for federal income tax purposes.

The following table compares pro forma revenue and loss from operations for the combined entity for the three months ended March 31, 2021 as if the acquisition had taken place on January 1, 2021 to actual results for the three months ended March 31, 2022. These pro forma results do not necessarily reflect what the combined entity's results would have been had the acquisition taken place at that time, and this pro forma financial information may not be useful in predicting our future financial results. The actual results might have differed significantly from the pro forma amounts reflected herein due to a variety of factors. The following includes pro forma adjustments to reflect amortization of acquired technology intangible assets. We do not disclose pro forma impact related to income taxes or earnings-per-share as we do not believe those are useful to the reader in our situation.

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

 

2021

 

Revenue

 

$

14,743

 

 

$

13,195

 

Loss from operations

 

 

(30,689

)

 

 

(13,672

)

During the three months ended March 31, 2022, Danimer Catalytic Technologies incurred $2.9 million in expenses, including amortization expense.