Discontinued Operations and Disposal Groups

12 Months Ended

Dec. 31, 2021

Divestiture and Business Held for Sale [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

DIVESTITURE AND BUSINESS HELD FOR SALE

Divestiture

On November 1, 2021, Eastman completed the previously reported sale of rubber additives (including Crystex™ insoluble sulfur and Santoflex™ antidegradants) and other product lines and related assets and technology of the global tire additives business ("rubber additives") of its Additives & Functional Products ("AFP") segment to an affiliate of One Rock Capital Partners, LLC ("One Rock"). The sale did not include the Eastman Impera™ and other performance resins product lines of the tire additives business. The Company will provide certain business transition and post-closing services to One Rock on agreed terms. The business being sold was not reported as a discontinued operation because the sale did not have a major effect on the Company's operations and financial results.

The total estimated consideration, after estimates of contingent consideration and post-closing adjustments and ongoing agreements through October 2027, was $687 million. The additional amount of consideration of up to $75 million is to be paid based on performance of divested rubber additives through December 2023. The divestiture resulted in a $552 million loss (including cumulative translation adjustment liquidation of $23 million and certain costs to sell of $10 million).

The major classes of divested assets and liabilities were as follows:



(Dollars in millions)
Assets divested
Trade receivables, net of allowance for doubtful accounts	$	107
Inventories	94
Other assets	26
Properties, net of accumulated depreciation	300
Goodwill	398
Intangible assets, net of accumulated amortization	381
Assets divested	1,306
Liabilities divested
Payables and other liabilities	48
Post-employment obligations	34
Other liabilities	18
Liabilities divested	100
Disposal group, net	$	1,206

Separately, the Company recognized $15 million of transaction costs for the sale of the business in 2021. Transaction costs are expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

Business Held for Sale

On October 28, 2021, the Company entered into a definitive agreement to sell the adhesives resins business, which includes hydrocarbon resins (including Impera™ tire resins), pure monomer resins, polyolefin polymers, rosins and dispersions, and oleochemical and fatty-acid based resins product lines ("adhesives resins"), of its AFP segment for $1 billion. The sale, subject to regulatory approvals and satisfaction of other customary closing conditions, is expected to be completed in first half 2022. The final purchase price is subject to working capital and other adjustments at closing. The business being sold will not be reported as a discontinued operation because the sale will not have a major effect on the Company's operations and financial results. As of the definitive agreement date and until the sale, the adhesives resins business disposal group will be classified as held for sale and reported at its carrying value given this value is lower than the estimated fair value less cost to sell. Long-lived assets and definite-lived intangible assets are not depreciated or amortized while classified as held for sale.

The major classes of assets and liabilities of the business classified as held for sale as of December 31, 2021 were as follows:


	December 31,
(Dollars in millions)	2021
Assets held for sale
Trade receivables, net of allowance for doubtful accounts	$	110
Inventories	143
Other assets	40
Properties, net of accumulated depreciation	301
Goodwill	399
Intangible assets, net of accumulated amortization	14
Assets held for sale	1,007
Liabilities held for sale
Payables and other liabilities	82
Deferred tax liability	7
Other liabilities	2
Liabilities held for sale	91
Disposal group, net	$	916

The Company recognized $3 million of transaction costs for the business held for sale in 2021. Transaction costs are expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.