Business Combinations

6 Months Ended

Mar. 28, 2025

Business Combinations

Fiscal 2025

There were no business combinations entered into during the second quarter of fiscal 2025 or during the fiscal year-to-date period ended March 28, 2025.

Fiscal 2024

GE Licensing

On August 19, 2024, we acquired 100% of the issued and outstanding equity interests of GE Intellectual Property Licensing, LLC and GE Technology Development, Inc., which, collectively with each of their subsidiaries, comprised General Electric’s intellectual property licensing business that primarily targeted the consumer digital media and electronics sectors ("GE Licensing" or the "acquiree"). The acquisition is an extension of our existing licensing businesses and is expected to strengthen and expand the scale of our intellectual property portfolio. The total consideration for the acquisition is comprised as the following (in thousands):


	Amount
Total amount paid for consideration	$	444,882
Less: Noncontrolling interest in Via LA	(9,921)
Settlement of pre-existing relationship	(750)
Total consideration transferred for acquisition of GE Licensing	434,211
Less: Cash acquired	(2,232)
Total consideration, net of cash acquired	$	431,979

We have accounted for the taxable transaction under the acquisition method of accounting for business combinations, and the results of operations of GE Licensing have been included in our consolidated statements of operations from the date of acquisition. Additionally, we have estimated the fair values of the net tangible and intangible assets acquired, and liabilities assumed as of the acquisition date, with any amounts paid in excess of the net assets recorded as goodwill. The fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized, including potential changes to income tax-related accounts. In the first quarter of fiscal 2025, we increased the estimated fair value of the assets held for sale by $8.4 million. In the second quarter of fiscal 2025, we decreased the estimated fair value of the assets held for sale by $2.1 million resulting in a net change of $6.3 million. We expect to finalize the valuation within the one year measurement period.

The following table summarizes the preliminary acquisition date fair values of the assets acquired and liabilities assumed (in thousands):


Recognized Identifiable Assets Acquired and Liabilities Assumed	Purchase Price Allocation (Preliminary)
Cash and cash equivalents	$	2,232
Accounts receivable	20,171
Other current assets	9,636
Assets held for sale, current	24,494
Long-term investments	76,000
Intangible assets	274,197
Goodwill	75,387
Other non-current assets	3,503
Other current liabilities	(15,370)
Contingent liabilities	(14,199)
Other non-current liabilities	(21,840)
Purchase Consideration	$	434,211

We initially acquired certain assets valued at $24.5 million as part of the acquisition which we planned to sell shortly after the acquisition date. These assets are classified as held for sale within prepaid expenses and other current assets on the consolidated balance sheets and are measured at fair value less cost to sell. In the second

quarter of fiscal year 2025, we sold $15.8 million of the assets classified as held for sale and $8.7 million of assets classified as held for sale remain.

Goodwill is representative of our expectation of the benefits and synergies from the integration of GE Licensing operations and the associated assembled workforce, which does not qualify for separate recognition as an intangible asset. All of the goodwill recognized is expected to be deductible for income tax purposes.

The preliminary value of acquired intangibles was determined based on the present value of estimated future cash flows using the multi-period excess earnings method with inputs such as projected revenue attributable to licensors in the patent pools, revenue retention rate, maintenance sales and marketing expenses, income tax rate, post-tax returns for contributory assets, and discount rate.

Dolby Laboratories, Inc. 10-Q