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Business Divestiture | 12 Months Ended
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Dec. 31, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Business Divestiture | 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 the sale consideration. In addition, approximately $15 million of cash proceeds held in escrow were released to the Company upon satisfaction of certain conditions. The sale consideration was further reduced by approximately $3 million for certain post-closing adjustments, which were primarily related 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 year ended December 31, 2022, the transition services income under the transition services agreements was approximately $11 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) Income. 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 |
Escrow proceeds | 15 |
Proceeds attributable to transition service agreements | (36) |
Direct costs to sell | (11) |
Net cash settlement for post-closing adjustments | (3) |
Fair value of sale consideration | $ | 1,219 |
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 | $ | 1,219 |
Cash transferred to the buyer on the closing balance sheet | (49) |
Employee reimbursement receivable | (1) |
Net proceeds received from business divestiture | $ | 1,169 |
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 $11 million presented in Other income, net on the Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the year ended December 31, 2022. The Company also recognized the income tax effects associated with the divestiture of approximately $96 million based on preliminary estimates as of December 31, 2022. ASSETS HELD FOR SALE During the fourth quarter of 2022, the Company announced it had entered into an agreement to sell a portion of its Savory Solutions business, which is part of the Nourish segment. In addition, in the first quarter of 2023, the Company announced it had entered into an agreement to sell its Flavor Specialty Ingredients business within the Scent segment. Both transactions are subject to customary closing conditions and are expected to close in the second quarter and third quarter of 2023, respectively. The sales do not constitute a strategic shift of the Company’s operations and do not, and will not, have major effects on the Company’s operations and financial results; therefore, the transactions do not meet the discontinued operations criteria. It was determined that the assets and liabilities of these businesses met the criteria to be presented as “held for sale.” As a result, as of December 31, 2022, such assets and liabilities were classified as held for sale and are reported on the Consolidated Balance Sheets. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for both businesses. The carrying value is subject to change based on developments leading up to the closing date. Included in the Company’s Consolidated Balance Sheets as of December 31, 2022 are the following carrying amounts of the assets and liabilities held for sale:
(DOLLARS IN MILLIONS) | December 31, 2022
Assets |
Cash and cash equivalents | $ | 52 |
Trade receivables, net | 85 |
Inventories | 157 |
Property, plant and equipment, net | 92 |
Goodwill | 348 |
Other intangible assets, net | 428 |
Operating lease right-of-use assets | 13 |
Other assets | 25 |
Total assets held-for-sale | $ | 1,200 |
Liabilities |
Accounts payable | $ | 56 |
Deferred tax liability(1) | 92 |
Other liabilities | 64 |
Total liabilities held-for-sale | $ | 212 |
_______________________ (1)The Company is currently analyzing the tax impact of the sale transaction and has included preliminary numbers for the deferred tax liability, which are subject to further updates. 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 is a part of the Health & Biosciences segment. The Company acquired the Microbial Control business unit as part of the Merger with N&B. See Note 4 for additional information. Included in the Company’s Consolidated Balance Sheets as of December 31, 2021 are the following carrying amounts of the assets and liabilities held for sale:
(DOLLARS IN MILLIONS) | December 31, 2021
Assets |
Trade receivables, net | $ | 63 |
Inventories | 125 |
Property, plant and equipment, net | 30 |
Goodwill | 536 |
Other intangible assets, net | 349 |
Operating lease right-of-use assets | 5 |
Other assets | 14 |
Total assets held-for-sale | $ | 1,122 |
Liabilities |
Accounts payable | $ | 69 |
Deferred tax liability | 24 |
Other liabilities | 8 |
Total liabilities held-for-sale | $ | 101 |

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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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