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Business Divestiture | 9 Months Ended
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Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Assets Held For Sale | BUSINESS DIVESTITURE Divestiture of Microbial Control During the third quarter of 2021, the Company announced it had entered into an agreement to sell its Microbial Control business unit, which was a part of the Health & Biosciences segment. The Company acquired the Microbial Control business unit as part of the Merger with N&B. The Company completed the divestiture of the Microbial Control business unit on July 1, 2022 and received cash proceeds of approximately $1.254 billion, of which approximately $36 million was attributable to future services to be provided under certain transition service agreements as described below. Certain transaction costs related to the divestiture of approximately $11 million, which was contingent upon the consummation of the divestiture, were determined to be direct costs to sell and, as such, were adjusted against the fair value of sales consideration. In addition, approximately $15 million of cash proceeds were held in escrow and will be released to the Company upon satisfaction of certain conditions. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances. The Company entered into transition services agreements with the buyer for providing certain general accounting, information technology and other services up to 19 months following the date of the sale for minimal consideration. The fair value of these transition service agreements was determined to be approximately $36 million, which was adjusted against the sale consideration and recognized as deferred transition services income. For the three and nine months ended September 30, 2022, the transition services income under the transition services agreements was approximately $6 million and was recognized as a reduction to the costs incurred to provide services under the transition service agreements, which was included in Selling and administrative expenses on the Consolidated Statements of (Loss) Income and Comprehensive Loss. The following table summarizes the fair value of the sale consideration received in connection with the divestiture:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 1,254 |
Amount held in escrow | 15 |
Proceeds attributable to transition service agreements | (36) |
Direct costs to sell | (11) |
Fair Value of sale consideration | $ | 1,222 |
The net proceeds received from business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration reduced by the amount held in escrow and the Cash transferred to the buyer on the closing balance sheet as part of the transaction. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
(DOLLARS IN MILLIONS) |
Fair value of sale consideration | $ | 1,222 |
Amount held in escrow | (15) |
Cash transferred to the buyer on the closing balance sheet | (49) |
Net proceeds received from business divestiture | $ | 1,158 |
The carrying amount of net assets associated with the Microbial Control business unit was approximately $1.208 billion. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS) | June 30, 2022
Assets |
Current assets | $ | 263 |
Goodwill and other intangible assets, net | 867 |
Equity method investment | 74 |
Other assets | 80 |
Total assets | $ | 1,284 |
Liabilities |
Accounts payable | $ | 41 |
Other liabilities | 35 |
Total liabilities | $ | 76 |
As a result of the divestiture, the Company recognized a pre-tax gain of approximately $14 million, subject to certain post-closing adjustments, presented in other income, net on the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022. The Company also recognized the income tax effects associated with the divestiture of approximately $110 million based on preliminary estimates as of September 30, 2022.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI https://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 + Details
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