v3.19.1
BUSINESS COMBINATION
3 Months Ended
Mar. 31, 2019
Business Combinations [Abstract]  
BUSINESS COMBINATION
NOTE 2:-
BUSINESS COMBINATION

S.M.R.E

On January 24, 2019, the Company completed the acquisition of 56.8% of the outstanding common shares and voting rights of SMRE, a provider of innovative integrated powertrain technology and electronics for electric vehicles for approximately $73.9 million, net of cash acquired, out of which $42,240 was paid in cash and $34,601 was paid in shares of SolarEdge common stock (the “SMRE Acquisition”).

As part of SMRE Acquisition, the Company issued 334,096 PSUs that are subject to certain performance goals and a vesting period, at the amount of $13,444, which will be expensed in the condensed consolidated statements of operation in general and administrative expenses line item.

As of January 24, 2019, the fair value of the 43.2% non-controlling interests in SMRE is estimated to be $67.7 million. The fair value of the non-controlling interests was valued based on and at the transaction price.

The primary reason for the SMRE Acquisition was to acquire technology and customer relationships and to expand and diversify the Company’s business by entering into the electric vehicles market.

The Company determined that the SMRE Acquisition will be accounted for as a business combination in accordance with ASC 805 "Business Combinations".

During the period from the SMRE Acquisition through March 31, 2019, the Company purchased additional common shares of SMRE in the open market, for a further investment of $1.2 million.

The amounts of revenue and net loss of SMRE included in the Company’s condensed consolidated statements of operations for the period from January 24, 2019 through March 31, 2019 are $2,902 and $1,879, respectively.

The following table summarizes the preliminary estimated purchase price allocation of the business combination completed during the three months ended March 31, 2019:

Components of Purchase Price:
     
       
Cash
 
$
42,240
 
Less cash acquired
   
(2,925
)
Common stock
   
34,601
 
Total purchase price
 
$
73,916
 
         
Allocation of Purchase Price:
       
         
Total net identifiable assets
 
$
9,916
 
Total identifiable intangible assets, net and Goodwill (1)
   
131,734
 
         
Noncontrolling interest
   
(67,734
)
         
Total purchase price allocation (2)
 
$
73,916
 

(1)
The intangible assets comprised primarily of technology, in process research and development and customer relationships.

(2)
The Company is expecting to complete the preliminary estimated purchase price allocation during the measurement period of one year from January 24, 2019. Fair values that are still under review include among others, values assigned to identifiable intangible assets, goodwill, deferred income taxes and contingent liabilities.

During the three months ended March 31, 2019, the Company recognized $453 of aggregate acquisition-related costs that were expensed in the condensed consolidated statement of operations in general and administrative expenses line item.

The purchase price allocations for the business combinations completed during the year ended December 31, 2018 are still preliminary as of March 31, 2019.

The following table represents the pro-forma (unaudited) condensed consolidated statements of operations as if all acquisitions completed during the year ended December 31, 2018 and the three months ended March 31, 2019, had been included in the condensed consolidated statements of operations of the Company for the three months ended March 31, 2019 (unaudited) and 2018 (unaudited):
 
   
Three months ended March 31,
 
   
2019
   
2018
 
   
Unaudited
 
             
Revenue
 
$
272,943
   
$
231,784
 
Net income
 
$
16,610
   
$
28,654
 

The pro-forma results have been calculated after applying the Company’s accounting policies and adjusting the results of all acquisitions to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant and equipment and intangible assets had been applied since the acquisitions date, together with the consequential tax effects.

The pro-forma results are based on estimates and assumptions, which the Company believes are reasonable. The pro-forma results are not the results that would have been realized had the acquisitions actually occurred on January 1, 2018 and 2019, and are not necessarily indicative of the Company’s condensed consolidated statements of operations in future periods. The pro-forma results include adjustments related to business combinations accounting, primarily depreciation of property plant and equipment, amortization of intangible assets and together with the consequential tax effects.