This excerpt taken from the MRVL 10-K filed Apr 13, 2006.
On November 24, 2003, the Company acquired the remaining 54% of the shares of Asica not owned by the Company pursuant to a merger agreement. Prior to the merger, the Company owned 46% of the shares of Asica, which designs and develops digital signal processors used in consumer and other applications. The acquisition has been accounted for using the purchase method of accounting, and the operating results of Asica have been included in the Companys consolidated financial statements from the date of acquisition.
The total purchase price of the acquisition was approximately $7.4 million. The purchase price consisted of the issuance of 180,274 shares of the Companys common stock and restricted common stock (valued at $19.36 per share for a total of $3.5 million) to Asica shareholders, the assumption of 52,042 employee stock options (valued at $16.97 per option for a total of $883,000), the Companys existing $2.8 million investment in preferred stock of Asica and acquisition related expenses of approximately $240,000. The value of the common and restricted stock was determined based on the average market price of the Companys common stock over a 3-day period ending on November 24, 2003. The value of the employee stock options assumed was determined using the Black-Scholes option pricing model with inputs of 90% for volatility, 4-year expected life, risk-free interest rate of 3% and a market value of $19.17 (the closing price of the Companys common stock on November 24, 2003). Of the 180,274 shares of common stock issued to Asica shareholders, 83,296 shares are restricted shares that vest over a four-year period. The unvested shares are subject to forfeiture in the event the shareholder terminates his employment with the Company.
The aggregate purchase price was allocated as follows (in thousands):
Amortizable intangible assets consist of purchased technology with a useful life of five years. Approximately $5.1 million has been allocated to goodwill, which represents the excess purchase price over the fair value of the net tangible and intangible assets acquired, and is not deductible for tax purposes.
The amount allocated to deferred stock-based compensation relates to the intrinsic value of the unvested restricted stock and stock options issued. The restricted stock and stock options vest over a period of four years. The deferred stock-based compensation is amortized on an accelerated basis over the vesting period of the individual awards consistent with the method described in FIN 28.
The pro-forma results for the last two years for the effect of the Asica acquisition have not been disclosed because they would not be materially different from the statement of operations.