During the third quarter of 2023, the Company announced it had entered into an agreement to sell its Cosmetic Ingredients business, which was a part of the Scent segment. The Company completed the divestiture on April 2, 2024, and received cash proceeds of approximately $841 million. The sale consideration is subject to certain post-closing adjustments, which is primarily related to cash, indebtedness and working capital balances.

The net proceeds received from the 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 adjusted by the cash transferred to the buyer as part of the transaction. Amounts paid for direct costs to sell are presented under Cash flows from operating activities. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:

The carrying amount of net assets associated with the business unit, adjusted for currency translation adjustment, was approximately $466 million. The major classes of assets and liabilities sold consisted of the following:


(DOLLARS IN MILLIONS)	April 2, 2024
Assets
Cash and cash equivalents	$	32
Trade receivables, net	18
Inventories	17
Property, plant and equipment, net	7
Goodwill	271
Other intangible assets, net	144
Operating lease right-of-use assets	10
Other assets	11
Total assets	510
Liabilities
Accounts payable	$	(5)
Deferred tax liability	(25)
Other liabilities	(18)
Total liabilities	(48)
Equity
Accumulated other comprehensive income - currency translation adjustment	4
Total equity	4
Carrying value of net asset (adjusted for currency translation adjustment)	$	466

As a result of the business divestiture, the Company recognized a pre-tax gain of approximately $365 million, subject to certain post-closing adjustments, presented in (Gains) losses on business disposals on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three and six months ended June 30, 2024. The total income tax expense/(benefit) recognized was approximately $34 million, with approximately $(7) million that was recognized during the year ended December 31, 2023.

The Company completed the divestiture of a Portion of the Savory Solutions business on May 31, 2023, and received net cash proceeds of approximately $821 million. In addition, a receivable of approximately $37 million was recorded which reflected the remaining sale consideration that was received in January 2024.

As a result of the divestiture, the Company recognized a pre-tax loss of approximately $10 million presented in (Gains) losses on business disposals on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three and six months ended June 30, 2023. There was a true-up settlement of $7 million for the three months ended December 31, 2023, resulting in a cumulative pre-tax loss of approximately $3 million. The Company also recognized the income tax effects associated with the transaction of approximately $7 million based on estimates as of June 30, 2023.

As part of the liquidation of a business in Russia for the sale of the portion of the Savory Solutions business, the Company recognized a pre-tax loss of approximately $10 million presented in the (Gains) losses on business disposals, and tax benefits of approximately $2 million presented in Provision for income taxes on the Consolidated Statements of Income and Comprehensive Income (Loss) for the six months ended June 30, 2023.

During the first quarter of 2024, the Company announced it had entered into an agreement to sell its Pharma Solutions business, that is primarily made up of most businesses within the Company's existing Pharma Solutions reportable operating segment as well as certain adjacent businesses (the "Pharma Solutions disposal group"). The transaction is subject to customary closing conditions and is expected to close in the second quarter of 2025.

The sale does not constitute a strategic shift of the Company’s operations and does not, and will not, have major effects on the Company’s operations and financial results. Therefore, the transaction does not meet the discontinued operations criteria.

The Company determined that the assets and liabilities of the Pharma Solutions disposal group met the criteria to be presented as “held for sale” during the second quarter of 2024. As a result, as of June 30, 2024, such assets and liabilities were classified as held for sale on the Consolidated Balance Sheets. The carrying value is subject to change based on developments leading up to the closing date.

The classification of the Pharma Solutions disposal group as held for sale was considered an event or change in circumstance which required an assessment of the existing Pharma Solutions reporting unit. The Company performed a pre-classification goodwill impairment test and determined that the fair value of the Pharma Solutions reporting unit exceeded the carrying value.

The Company engaged an independent third party to determine the fair value of the assets held for sale as of May 1, 2024, based upon the sale price including earn outs expected to be received from the buyer. The fair value of the earn out was based on a Monte Carlo simulation. Goodwill was allocated to the Pharma Solutions disposal group based upon the relative fair value of the businesses included in the disposal group compared to the reporting units to which the businesses relate. The Company then performed a post-classification goodwill impairment test and determined that the fair value was less than the carrying value of the Pharma Solutions disposal group. As such, the Company recorded a non-cash goodwill impairment charge of $64 million.

The Company also performed a goodwill impairment test of the remaining businesses in the Pharma Solutions reporting unit that were not classified as held for sale and determined that the fair value exceeded the carrying value.

The Company engaged an independent third-party to determine an updated fair value of the Pharma Solutions disposal group as of June 30, 2024. The Company determined that the fair value of $2,686 million (fair value of $2,717 million less estimated costs to sell of $31 million) of the Pharma Solutions disposal group was less than the carrying value. As such, the Company recorded a loss of $282 million in the second quarter of 2024 to adjust the carrying value of the disposal group to its fair value less cost to sell. The Company recorded the loss on classification of held for sale as a valuation allowance on the group of assets held for sale, without allocation to the individual assets or major classes of assets within the group. Due to the nature of estimates, the carrying value is subject to change based on developments leading up to the closing date, and the actual amounts realized upon sale may differ from amounts recognized as of June 30, 2024. Any difference will be recognized as a gain or loss in future financial statements.

In addition, pursuant to the terms agreed under the 2026 Term Loan Facility, a portion of the net cash proceeds received from the sale of the Pharma Solutions disposal group, when and if completed, must be used to repay our borrowings under the 2026 Term Loan Facility. Therefore, the Company reclassified the 2026 Term Loan Facility balance from "Long-term debt" to "Short-term debt and current portion of long-term debt" (see Note 13).

As of December 31, 2023, the assets and liabilities of the Cosmetic Ingredients business met the criteria to be presented as "held for sale". The Company completed the divestiture on April 2, 2024 and therefore the assets and liabilities of the Cosmetic Ingredients business are not included in the Company's Consolidated Balance Sheets as of June 30, 2024.


(DOLLARS IN MILLIONS)	June 30, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	3	$	26
Trade receivables, net	170		15
Inventories	260		18
Property, plant and equipment, net	358		7
Goodwill(1)	1,163		276
Other intangible assets, net	1,056		146
Operating lease right-of-use assets	13		9
Other assets	74		9
Less: Loss recognized on assets held-for-sale(2)	(282)		—
Total assets held-for-sale	$	2,815	$	506
Liabilities
Accounts payable	$	74	$	4
Deferred tax liability	61		24
Other liabilities	96		18
Total liabilities held-for-sale	$	231	$	46

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