Discontinued Operations and Disposal Groups

3 Months Ended

Mar. 31, 2022

Divestitures and Business Held for Sale [Abstract]

DIVESTITURE AND BUSINESS HELD FOR SALE

Divestiture

On November 1, 2021, the Company and certain of its subsidiaries completed the sale of its 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. The sale did not include the Eastman Impera™ and other performance resins product lines of the tire additives business. The Company is providing certain business transition and post-closing services to the buyer on agreed terms. The business 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 as of the date of the divestiture 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 $1 million and $15 million of transaction costs for the sale of the business in first quarter 2022 and twelve months 2021, respectively. Transaction costs are expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

Business Held for Sale

On October 28, 2021, the Company and certain of its subsidiaries entered into a definitive agreement to sell the adhesives resins business, which includes hydrocarbon resins (including Eastman 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 was completed on April 1, 2022. The business being sold is not being reported as a discontinued operation because the sale did 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 March 31, 2022 were as follows:


	March 31,
(Dollars in millions)	2022
Assets held for sale
Trade receivables, net of allowance for doubtful accounts	$	132
Inventories	154
Other assets	28
Properties, net of accumulated depreciation	303
Goodwill	399
Intangible assets, net of accumulated amortization	14
Assets held for sale	1,030
Liabilities held for sale
Payables and other liabilities	88
Deferred tax liability	7
Other liabilities	4
Liabilities held for sale	99
Disposal group, net	$	931

The Company recognized $8 million and $3 million of transaction costs for the business held for sale in first quarter 2022 and twelve months 2021, respectively. Transaction costs are expensed as incurred and are included in the "Selling, general and administrative expenses" line item in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.