42. Business combination
On June 24, 2016, the Company, LFoundry Europe GmbH (“LFoundry Europe”) and Marsica Innovation S.p.A (“Marsica”) entered into a sale and purchase agreement pursuant to which LFoundry Europe and Marsica agreed to sell and the Company agreed to purchase 70% of the corporate capital of LFoundry for an aggregate cash consideration of EUR49 million subject to adjustment. The acquisition was completed on July 29, 2016.
The assets and liabilities recognized as of July 29, 2016 as a result of the acquisition were as follows:
|
|
|
Fair value |
|
|
|
USD’000 |
|
Property, plant and equipment |
|
113,119 |
|
Intangible assets |
|
8,088 |
|
Restrict cash |
|
26,042 |
|
Other assets |
|
5,590 |
|
Total non-current assets |
|
152,839 |
|
Inventories |
|
29,252 |
|
Prepayment and prepaid operating expenses |
|
2,864 |
|
Trade and other receivables |
|
34,186 |
|
Other financial assets |
|
111 |
|
Cash and cash equivalent |
|
18,987 |
|
Total current assets |
|
85,400 |
|
Total Assets |
|
238,239 |
|
Borrowings |
|
71,654 |
|
Deferred tax liability |
|
15,639 |
|
Other long-term liabilities |
|
35,354 |
|
Total non-current liabilities |
|
122,647 |
|
Trade and other payables |
|
37,005 |
|
Borrowings |
|
4,904 |
|
Accrued liabilities |
|
1,635 |
|
Total current liabilities |
|
43,544 |
|
Total Liabilities |
|
166,191 |
|
Total identifiable net assets at fair value |
|
72,048 |
|
Less: non-controlling interests |
|
(21,615) |
|
Goodwill on acquisition |
|
3,933 |
|
Satisfied by cash |
|
54,366 |
The goodwill is attributable to the workforce and the high profitability of the acquired business. It will not be deductible for tax purposes.
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
|
|
|
USD’000 |
|
Cash paid for acquisition |
|
(54,366) |
|
Other cash consideration |
|
(37,837) |
|
Cash and cash equivalent acquired |
|
18,987 |
|
Net cash outflow |
|
(73,216) |
For the purpose of business combination, the Company offered LFoundry a long–term loans, amounted to US$37.8 million, for the repayment of LFoundry’s debts.