Company: ROK
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001024478-25-000035
Chunk: 11

Company: ROCKWELL AUTOMATION, INC
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 1
Chunk 11
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2, 2023. The aggregate purchase price allocation is as follows (in millions):Purchase Price AllocationReceivables$8 Inventory22 Goodwill 283 Intangible assets313 All other assets11 Total assets acquired637 Less: Deferred tax liability(9)Less: Liabilities assumed(19)Net assets acquired$609 Purchase ConsiderationCash consideration, net of cash acquired$566 Contingent consideration43 Total purchase consideration, net of cash acquired$609 Intangible assets identified include $270 million of technology, $41 million of trademarks, and $2 million of customer relationships. We assigned the full amount of goodwill and all other assets acquired to our Intelligent Devices segment. The goodwill recorded represents intangible assets that do not qualify for separate recognition. This goodwill arises because the purchase price for Clearpath reflects a number of factors including the future earnings and cash flow potential for the business and resulting synergies from the business portfolio and industry expertise. We do not expect the goodwill to be deductible for tax purposes. The intangible assets were valued using an income approach, specifically the relief from royalty method and multi-period excess earnings method. The relief from royalty method calculates value based on hypothetical payments that would be saved by owning an asset rather than licensing it. The multi-period excess earnings method is the isolation of cash flows from a single intangible asset and measures fair value by discounting them to present value. These values are considered level 3 measurements under the U.S. GAAP fair value hierarchy. Refer to Note 9 for further information regarding levels in the fair value hierarchy. The key assumption requiring the use of judgement in the valuation of the technology asset was the obsolescence factor, where we estimated a phase out over 12 years; other assumptions included forecasted revenue growth rates and margin and the discount rate. The key assumption requiring the use of judgement in the valuation of the trademarks asset was the weighted average royalty rate of 2.05 percent; other assumptions included forecasted revenue growth rates and the discount rate.The purchase price included up to $50 million in contingent consideration that could have been earned by the sellers if Clearpath achieved revenue targets in two performance periods ending February 29, 2024, and February 28, 2025. We developed various risk-based scenarios and a probability outcome model and determined the fair value to be $43 million as of the acquisition date, which is considered a level 3 measurement under the U.S. GAAP fair value hierarchy.