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Business Divestitures | 6 Months Ended
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Jun. 30, 2025
Discontinued Operations and Disposal Groups [Abstract] |
Business Divestitures and Assets and Liabilities Held for Sale | BUSINESS DIVESTITURES AND ASSETS AND LIABILITIES HELD FOR SALE Divestiture of the Pharma Solutions Disposal Group During March 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 (the “Pharma Solutions disposal group”). The Company completed the divestiture on May 1, 2025, and received gross cash proceeds of approximately $2.564 billion. The sale consideration is subject to certain post-closing adjustments, which are primarily related to cash, working capital balances, and other adjustments per the transaction agreement. The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 2,564 |
Amount held in escrow | 17 |
Earnout consideration | 100 |
Direct costs to sell | (30) |
Fair value of sale consideration | $ | 2,651 |
The fair value of sale consideration includes the fair value of the earnout expected to be received from the Buyer of $100 million. The Company has potential to earn a total of $250 million additional proceeds based on 2024 and 2025 results of the Pharma Solutions disposal group. The 2024 results and related earnout amount are in process of being finalized with the buyer in a third party arbitration process. The Company engaged an independent third party to determine the fair value of the expected earnout consideration as of June 30, 2025, which was based on a Monte Carlo simulation. The fair value estimation uses Level 3 unobservable inputs as categorized within the ASC Topic 820 fair value hierarchy. This method considers the terms and conditions of the earnout as described in the relevant transaction agreements, our best estimates of forecasted EBITDA for the earnout periods as applicable, and assumptions such as risk-adjusted discount rate, EBITDA volatility, counterparty discount rate and risk-free rate. The simulation consists first in risk-adjusting the EBITDA projections using a risk-adjusted discount rate and then simulating a range of EBITDA over the applicable period using the estimate of EBITDA volatility. The fair value of the earnout is estimated as the present value of the potential range of payouts averaged across the range of simulated EBITDA using the counterparty discount rate. As the determination of performance of the subject business in 2024 has not been resolved and the actual performance for all of 2025 is not yet known, these estimations are subject to significant uncertainty. Based on the final calculation of 2024 and 2025 results, there could be a significant increase or decrease in the total earnout received by the Company. The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, reduced 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:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 2,564 |
Cash transferred to the buyer | (29) |
Net Cash flows from investing activities | $ | 2,535 |
The carrying value of net assets associated with the Pharma Solutions disposal group, adjusted for currency translation adjustment, NCI, and pension adjustments amounted to approximately $2.742 billion. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS) | May 1, 2025
Assets |
Cash and cash equivalents | $ | 29 |
Trade receivables, net | 218 |
Inventories | 289 |
Property, plant and equipment, net | 439 |
Goodwill(1) | 1,190 |
Other intangible assets, net | 1,093 |
Operating lease right-of-use assets | 68 |
Deferred tax assets | 17 |
Other assets | 116 |
Less: Loss recognized on assets held-for-sale(2) | (337) |
Total assets | 3,122 |
Liabilities |
Accounts payable | $ | (131) |
Deferred tax liability | (75) |
Other liabilities | (193) |
Total liabilities | (399) |
Equity |
Accumulated other comprehensive income - currency translation adjustment | $ | 49 |
Accumulated other comprehensive income - pension adjustment | (26) |
Non-controlling Interests (NCI) | (4) |
Total equity | 19 |
Carrying value of net assets (adjusted for currency translation, pension, and NCI adjustments) | $ | 2,742 |
_______________________ (1) The goodwill balance is presented net of $64 million of goodwill impairment recorded in 2024. (2) A loss was recorded on assets held-for-sale in the amount of $337 million through March 31, 2025. As a result of the business divestiture, the Company recognized a pre-tax loss of approximately $91 million, subject to certain post-closing adjustments, presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. This is in addition to the life-to-date loss on assets classified as held for sale of $337 million recognized through March 31, 2025. $282 million of the loss on assets classified as held for sale was recognized during the three and six months ended June 30, 2024. The total income tax expense recognized was approximately $81 million, including approximately $70 million of income tax benefit that was recognized during the year ended December 31, 2024. Divestiture of the Nitrocellulose business During October 2024, the Company entered into an agreement to sell its Nitrocellulose business (including the related industrial park in Germany), which was included within the Company’s existing Pharma Solutions reportable operating segment. The Company completed the divestiture on May 9, 2025, and received cash proceeds of approximately $161 million. The sale consideration is subject to certain post-closing adjustments, which are primarily related to cash, working capital balances, and other adjustments per the transaction agreement. The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 161 |
Direct costs to sell | (3) |
Fair value of sale consideration | $ | 158 |
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:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 161 |
Cash transferred to the buyer | (9) |
Net Cash flows from investing activities | $ | 152 |
The carrying amount of net assets associated with the Nitrocellulose business, adjusted for currency translation adjustment and pension adjustments, was approximately $148 million. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS) | May 9, 2025
Assets |
Cash and cash equivalents | $ | 9 |
Trade receivables, net | 33 |
Inventories | 15 |
Property, plant and equipment, net | 60 |
Goodwill | 77 |
Other intangible assets, net | 19 |
Other assets | 40 |
Total assets | 253 |
Liabilities |
Accounts payable | $ | (30) |
Other liabilities | (50) |
Total liabilities | (80) |
Equity |
Accumulated other comprehensive income - currency translation adjustment | (1) |
Accumulated other comprehensive income - pension adjustment | (24) |
Total equity | (25) |
Carrying value of net assets (adjusted for currency translation and pension adjustments) | $ | 148 |
As a result of the business divestiture, the Company recognized a pre-tax gain of approximately $10 million, subject to certain post-closing adjustments, presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. The total income tax benefit recognized was approximately $1 million for the three and six months ended June 30, 2025. Divestiture of a Tobacco Flavoring Business in North America The Company completed the divestiture of the Tobacco Flavoring Business in North America on April 1, 2025, and received gross cash proceeds of approximately $20 million. As a result of the divestiture, the Company recognized a pre-tax gain of less than $1 million presented in Losses (gains) on business disposals on the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended June 30, 2025. The total income tax expense recognized was approximately $5 million for the three and six months ended June 30, 2025. Assets and Liabilities Held for Sale There were no assets and liabilities that met the criteria to be presented as “held for sale” as of June 30, 2025. The Company’s Consolidated Balance Sheet as of December 31, 2024 included the carrying amounts of the assets and liabilities of the Pharma Solutions disposal group, Nitrocellulose disposal group, and a portion of the Savory Solutions business in Turkey as held for sale. The Company completed the sale of a portion of the Savory Solutions business in Turkey during the three months ended March 31, 2025, and the sale of the Pharma Solutions disposal group and Nitrocellulose disposal group during the three months ended June 30, 2025.
(DOLLARS IN MILLIONS) |  | December 31, 2024
Assets |  |
Cash and cash equivalents |  | $ | 2 |
Trade receivables, net |  | 187 |
Inventories |  | 274 |
Property, plant and equipment, net |  | 451 |
Goodwill |  | 1,216 |
Other intangible assets, net |  | 1,078 |
Operating lease right-of-use assets |  | 57 |
Other assets |  | 112 |
Less: Loss recognized on assets held-for-sale |  | (347) |
Total assets held-for-sale |  | $ | 3,030 |
Liabilities |  |
Accounts payable |  | $ | 90 |
Deferred tax liability |  | 51 |
Other liabilities |  | 191 |
Total liabilities held-for-sale |  | $ | 332 |

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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 -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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