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ACQUISITIONS AND OTHER ARRANGEMENTS | 6 Months Ended
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Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS AND OTHER ARRANGEMENTS | ACQUISITIONS AND OTHER ARRANGEMENTS Hillrom On December 13, 2021, we completed our acquisition of all outstanding equity interests of Hill-Rom Holdings, Inc. (Hillrom) for a purchase price of $10.5 billion. Including the assumption of Hillrom's outstanding debt, the enterprise value of the transaction was approximately $12.8 billion. Under the terms of the transaction agreement, Hillrom shareholders received $156.00 in cash per outstanding Hillrom common share. The following table summarizes the fair value of the total consideration paid:
(in millions) |
Cash consideration paid to Hillrom shareholders(a) | $ | 10,474 |
Fair value of equity awards issued to Hillrom equity award holders(b) | 2 |
Total Consideration | $ | 10,476 |
(a) Represents cash consideration transferred of $156.00 per outstanding Hillrom common share to existing shareholders and holders of equity awards that vested at closing pursuant to their original terms. (b) Represents the pre-acquisition service portion of the fair value of 668 thousand replacement restricted stock units issued to Hillrom equity award holders at closing. The valuation of assets acquired and liabilities assumed has not yet been finalized as of June 30, 2022. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for acquired intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date:
(in millions) |
Assets acquired and liabilities assumed |
Cash and cash equivalents | $ | 399 |
Accounts receivable | 562 |
Inventories | 557 |
Prepaid expenses and other current assets | 49 |
Property, plant and equipment | 502 |
Goodwill | 6,820 |
Other intangible assets | 6,029 |
Operating lease right-of-use assets | 74 |
Other non-current assets | 132 |
Short-term debt | (250) |
Accounts payable | (140) |
Accrued expenses and other current liabilities | (557) |
Long-term debt and finance lease obligations | (2,118) |
Operating lease liabilities | (57) |
Other non-current liabilities | (1,526) |
Total assets acquired and liabilities assumed | $ | 10,476 |
In the first half of 2022 we recorded measurement period adjustments, primarily impacting accounts receivable, other intangible assets, and deferred income tax liabilities. Individually the measurement period adjustments were not material and in total increased goodwill by $35 million. The measurement period adjustments did not have a significant impact to our results of operations. The goodwill from the Hillrom acquisition, which is not deductible for tax purposes, includes the value of an assembled workforce as well as the overall strategic benefits provided to our product portfolio and is included in the Hillrom segment. For the six months ended June 30, 2022, we recognized $159 million of incremental costs of sales from the fair value step-ups on acquired Hillrom inventory that was sold in the first quarter. Other Business Development Activities In March 2022, we entered into an agreement with a subsidiary of Pfizer Inc. to acquire the rights to Zosyn, a premixed frozen piperacillin-tazobactam product, in the U.S. and Canada. Zosyn is used for the treatment of intra-abdominal infections, nosocomial pneumonia, skin and skin structure infections, female pelvic infections and community-acquired pneumonia. Under the terms of the acquisition, we paid the acquisition price of $122 million currently, received specified intellectual property, including patent rights, in the first quarter and will receive additional intellectual property, including the product rights to Zosyn, in the first quarter of 2023. Under the arrangement, we are entitled to receive profit sharing payments from sales of Zosyn until the product rights transfer to us in March 2023. The transaction has been accounted for as an asset acquisition, as substantially all of the fair value of the assets being acquired under the arrangement was concentrated in the product rights that we will receive, which we classify as a developed technology intangible asset. Accordingly, the $122 million purchase price was primarily allocated to the developed technology intangible asset class and will be amortized over an estimated useful life of 9 years.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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