|9 Months Ended|
Sep. 30, 2021
|Business Combinations [Abstract]|
Note 2. Business Combinations
On August 11, 2021, we acquired all of the outstanding shares of Novomer, Inc. (“Novomer”), 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. Novomer 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. We have included Novomer's results in the Financial Statements since August 11, 2021. For the period ended September 30, 2021, Novomer recorded a net loss of $1.5 million.
As a private company, Novomer had not yet adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 842, Leases (“ASC 842”). We applied ASC 842 to the operating lease for Novomer's primary operating facility and recorded a right-of-use asset of $2.0 million and a lease liability of $2.0 million. At September 30, 2021, we have recorded contingent purchase price payable, which is payable to the sellers upon our collection of an income tax refund receivable arising from a prior period. All of these amounts are included in the table below that sets forth the preliminary fair values of assets acquired and liabilities assumed:
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 final purchase price determination is subject to customary post-close adjustments and our estimates of the fair values of assets acquired and liabilities assumed are preliminary and could change due to future events.
We plan to test acquired goodwill and intangibles for impairment annually each November 1.
The following table discloses pro forma revenues and earnings for the combined Danimer-Novomer entity as if the acquisition of Novomer took place on January 1, 2020. The pro forma revenue and losses from operations do not necessarily reflect what the combined entity's revenue and losses from operations 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 may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The following includes proforma adjustments to reflect amortization of acquired technology intangible assets and to reflect $2.6 million of transaction costs in the first quarter of 2020 instead of the three and nine months ended September 30, 2021.
Live Oak Acquisition Corp. (“Live Oak”) was incorporated in the State of Delaware on May 24, 2019 as a special purpose acquisition company formed for the purpose of effecting a business combination with one or more businesses. Live Oak completed its initial public offering in May 2020. On December 29, 2020, Live Oak consummated a business combination (“Business Combination”) with Meredian Holdings Group, Inc. (“Legacy Danimer”) with Legacy Danimer surviving the merger as a wholly owned subsidiary of Live Oak. In connection with the Business Combination, Live Oak changed its name to Danimer Scientific, Inc.
For financial accounting and reporting purposes, Legacy Danimer was deemed the accounting acquirer, Live Oak was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Effectively, the Business Combination was treated as the equivalent of Legacy Danimer issuing stock for the net assets of Live Oak, accompanied by a recapitalization. Under this method of accounting, the historical financial statements of Legacy Danimer are our historical financial statements. The net assets of Live Oak are stated at historical costs, with no goodwill or other intangible assets recorded, and were consolidated with Legacy Danimer’s financial statements on December 29, 2020.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef