Accounting for the Business Combination. The transaction will be accounted for as a continuation of IGI in accordance with IFRS as issued by the IASB. Under this method of accounting, while Pubco is the legal acquirer of both IGI and Xxxxxxxx, XXX has been identified as the accounting acquirer of Xxxxxxxx for accounting purposes. This determination was primarily based on IGI comprising the ongoing operations of the combined company, IGI senior management comprising the senior management of the combined company, and the former owners and management of IGI having control of the board of directors following the consummation of the transaction by virtue of being able to appoint a majority of the directors of the combined company. As Xxxxxxxx does not meet the definition of a business as defined in IFRS 3 — Business Combinations (“IFRS 3”), the acquisition is not within the scope of IFRS 3 and is accounted for as a share-based payment transaction in accordance with IFRS 2 — Share-based Payments (“IFRS 2”). Hence, the transaction will be accounted for as the continuance of IGI with recognition of the identifiable assets acquired and the liabilities assumed of Xxxxxxxx at fair value. Operations prior to the transaction will be those of IGI from an accounting point of view. Under IFRS 2, the transaction is measured at the fair value of the common shares deemed to have been issued by IGI for the ownership interest in Pubco to be the same as if the transaction had taken the legal form of IGI acquiring 100% of Xxxxxxxx. The difference between the fair value of the common shares/warrants deemed to have been issued by IGI and the fair value of Xxxxxxxx’s identifiable net assets acquired represents a transaction cost or a bargain purchase that will be recognized in the statement of income.
Accounting for the Business Combination. The Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, TSIA will be treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Latch issuing shares for the net assets of TSIA, accompanied by a recapitalization. The net assets of TSIA will be recognized at fair value (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded. Latch has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances: • Latch’s shareholders will have majority of the voting power under both the no redemption and maximum redemption scenarios • Xxxxx will appoint the majority of the board of directors of the Post-Combination Company • Latch’s existing management will comprise the management of the Post-Combination Company • Latch will comprise the ongoing operations of the Post-Combination Company • Latch is the larger entity based on historical revenues and business operations • The Post-Combination Company will assume Xxxxx’s name. Description of the Business Combination (in millions) Redemptions Redemptions Share issuance to Latch shareholders $ 1,000.0 $ 1,000.0 Share issuance to TSIA shareholders 300.0 — Share issuance to Subscriber(s) 190.0 190.0 Share issuance to Sponsor 67.6 67.6 Share Consideration—at Closing $ 1,557.6 $ 1,257.6 69 Pursuant to the Merger Agreement, the aggregate stock consideration issued by the Post-Combination Company in the Business Combination will be $1.558 billion and $1.258 billion, consisting of 155,762,000 and 125,762,000 newly issued shares, under a no redemptions and maximum redemption scenarios, respectively, of the Post-Combination Company valued at $10.00 per share. Under both scenarios, Latch will receive $1.0 billion in the form of 100,000,000 newly issued shares of the Post-Combination Company. TSIA public shareholders will receive $300.0 million in the form of 30,000,000 newly issued shares assuming no redemptions, the Subscribers will receive $190.0 million in the form of 19,000,000 newly issued shares, and the Sponsor will receive $67.6 million in the form of 6,762,000 newly issued shares in exchange for TSIA’s existing Class B common s...
Accounting for the Business Combination. As the first step within the Business Combination, Listco and Ajax completed the Reorganization. As a result of the Reorganization, which will be accounted for as a capital reorganization, the existing shareholders of Ajax continued to retain control through their full ownership of Listco. Under a capital reorganization, the consolidated financial statements of Listco reflect the net assets transferred at pre-combination predecessor book values. The next step, being the acquisition of the Cazoo Shares by Listco, will be accounted for as a “reverse merger” in accordance with IFRS. Under this method of accounting, Listco will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the following assumptions: ● Cazoo Shareholders will hold a majority of the voting power of the combined company; ● Cazoo’s operations will substantially comprise the ongoing operations of the combined company; ● Cazoo’s designees are expected to comprise a majority of the governing body of the combined company; and ● Xxxxx’s senior management will comprise the senior management of the combined company. Accordingly, for accounting purposes, the acquisition of the Cazoo Shares by Listco will be treated as the equivalent of Cazoo issuing shares for the net assets of Listco, accompanied by a recapitalization. It has been determined that Listco is not a business under IFRS hence, the transaction is accounted for within the scope of IFRS 2 (“Share-based payment”). In accordance with IFRS 2, the difference in the fair value of the Cazoo equity instruments deemed issued to Listco shareholders, over the fair value of identifiable net assets of Listco, represents a service for listing and is accounted for as a share-based payment which is expensed as incurred. The net assets of Listco will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the acquisition of the Cazoo Shares by Listco will be deemed to be those of Cazoo.
