XML 26 R11.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

Acquisition of NJOY | 3 Months Ended
--- | ---
Mar. 31, 2024
Business Combination and Asset Acquisition [Abstract] |
Acquisition of NJOY | Acquisition of NJOY On June 1, 2023, we acquired NJOY Holdings (“NJOY Transaction”), which provided us with full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE, currently the only pod-based e-vapor product with market authorizations from the U.S. Food and Drug Administration (“FDA”). The total consideration for the NJOY Transaction of approximately $2.9 billion consisted of approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of up to $500 million in additional cash payments that are contingent on receipt of FDA authorizations with respect to certain NJOY products. The fair value of these contingent payments at March 31, 2024, December 31, 2023 and on the acquisition date was approximately $130 million, which is included in the total consideration. We accounted for this acquisition as a business combination. The fair value estimates of the assets acquired and liabilities assumed are preliminary and subject to adjustments during the measurement period (up to one year following the acquisition date). The primary area of accounting for the NJOY Transaction that is not yet finalized is the assessment of contingent liabilities, which could impact the fair value of certain intangible assets acquired and residual goodwill, including any related tax impact. The amounts in the table below represent the preliminary estimates for purchase price allocation to assets acquired and liabilities assumed in the NJOY Transaction, including measurement period adjustments made for the three months ended March 31, 2024. We recorded no measurement period adjustments in 2023. The preliminary purchase price allocation will be finalized by the end of the measurement period.
(in millions) | Preliminary Purchase Price Allocation | Measurement period adjustments recognized at March 31, 2024 | Updated Preliminary Purchase Price Allocation
Cash and cash equivalents | $ | 22 |  | $ | — |  | $ | 22 |
Receivables | 7 |  | — |  | 7 |
Inventories | 19 |  | — |  | 19 |
Other assets | 7 |  | — |  | 7 |
Property, plant and equipment | 16 |  | — |  | 16 |
Other intangible assets: |  |  |
Developed technology (amortizable) | 1,000 |  | — |  | 1,000 |
Trademarks (amortizable) | 230 |  | (40) |  | 190 |
Supplier agreements (amortizable) | 180 |  | (180) |  | — |
Accounts payable | (7) |  | — |  | (7) |
Accrued liabilities | (20) |  | — |  | (20) |
Deferred income taxes | (167) |  | 66 |  | (101) |
Total identifiable net assets | 1,287 |  | (154) |  | 1,133 |
Total consideration | 2,901 |  | — |  | 2,901 |
Goodwill | $ | 1,614 |  | $ | 154 |  | $ | 1,768 |
The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflects the value of future growth opportunities in the e-vapor category. None of the goodwill or other intangible assets is deductible for tax purposes. The significant assumptions used in determining the preliminary fair values of the identifiable intangible assets included volume growth rates, operating margins, the assessment of acquired technology life cycles, discount rates, as well as other factors. We determined the preliminary fair values of the identifiable intangible assets using an income approach. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow analyses, and thus are classified in Level 3 of the fair value hierarchy. We amortize the intangible assets over a weighted-average period of approximately 18 years. Following the measurement period adjustments made in the first quarter of 2024, we estimate our total annual pre-tax amortization expense for all of our definite-lived intangible assets, which includes the impact of the NJOY Transaction, to be approximately $150 million for each of the next five years, assuming no additional transactions occur that require the amortization of intangible assets and no impacts of any additional measurement period adjustments related to the NJOY Transaction. In determining the estimated fair value of contingent payments, we made certain judgments, estimates and assumptions, the most significant of which was the likelihood of certain potential regulatory outcomes. Contingent payments are classified in Level 3 of the fair value hierarchy.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration