XML 62 R11.htm IDEA: XBRL DOCUMENT
v3.22.2

Acquisitions and Divestitures | 6 Months Ended
--- | ---
Jul. 02, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and Divestitures | ACQUISITIONS AND DIVESTITURES Acquisitions During the Six Months Ended July 2, 2022 HRA Pharma On April 29, 2022, we completed the previously announced acquisition of 100% of the outstanding equity interest in HRA Pharma for total consideration of €1.8 billion, or approximately $1.9 billion. We funded the transaction with cash on hand and borrowings under our New Senior Secured Credit Facilities (as defined in Note 11). HRA Pharma is a self-care based company with consumer brands such as Compeed®, ellaOne® and Mederma®, as well as a trusted rare disease portfolio. The acquisition completed our transformation to a consumer self-care company. HRA Pharma’s operations are reported in both our CSCA and CSCI segments. The acquisition of HRA Pharma was accounted for as a business combination and has been reported in our Consolidated Statements of Operations as of the acquisition date. From April 29, 2022 through July 2, 2022, HRA Pharma generated net sales of $57.8 million and a net loss of $13.1 million, inclusive of $6.5 million of cost of goods sold related to the acquisition step up to fair value on inventories sold and $16.4 million of amortization related to intangible assets recognized on acquisition. During three and six months ended July 2, 2022, we incurred $36.3 million and $43.3 million of transaction costs related to the acquisition (legal, banking and other professional fees), respectively. The amounts were recorded in Administration expense and were not allocated to an operating segment. We are in the process of gathering significant relevant information needed to complete the valuation for the assets acquired and liabilities assumed. As a result, the initial accounting for the acquisition is incomplete. The provisional acquisition amounts recognized for assets acquired and liabilities assumed will be finalized as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized. The following table summarizes the consideration paid for HRA Pharma and the provisional amounts of the assets acquired and liabilities assumed (in millions):
| HRA Pharma
Purchase Price | $ | 1,945.6 |
Assets Acquired |
Cash and cash equivalents | $ | 44.1 |
Accounts receivable | 78.1 |
Inventories | 38.5 |
Prepaid expenses and other current assets | 16.8 |
Property, plant and equipment | 4.6 |
Operating lease assets | 9.7 |
Goodwill | 616.2 |
Definite-lived intangible assets |
Trademarks and trade names | 1,072.3 |
Developed product technology | 170.2 |
Distribution networks | 82.3 |
Indefinite lived intangibles |
In-process research and development | 63.3 |
Total intangible assets | 1,388.1 |
Deferred income taxes | 11.2 |
Other non-current assets | 0.8 |
Total assets | 2,208.1 |
Liabilities assumed |
Accounts payable | 44.5 |
Payroll and related taxes | 16.1 |
Accrued customer programs | 9.0 |
Other accrued liabilities | 13.9 |
Deferred income taxes | 168.8 |
Other non-current liabilities | 10.1 |
Total liabilities | 262.4 |
Non-Controlling Interest | 0.1 |
Net Assets Acquired | $ | 1,945.6 |
Goodwill of $616.2 million arising from the acquisition consists largely of the anticipated growth from new product sales, sales to new customers, HRA Pharma's assembled workforce, and the synergies expected from combining the operations of Perrigo and HRA Pharma. Goodwill of $106.1 million and $510.1 million was allocated to our CSCA and CSCI segments, respectively. We are currently evaluating the tax deductibility of the provisional goodwill; however, we do not expect deductibility for income tax purposes. The definite-lived intangible assets acquired consist of trademarks and trade names, developed product technologies, and distribution networks. Trademarks and trade names were assigned useful lives that range from 20 to 26 years. Developed product technologies were assigned 8 to 21-year useful lives. Distribution networks were assigned useful lives ranging from 2 to 23-years reflecting the intent to integrate certain external distributors and sales forces within the CSCI segment. Trademarks and trade names, developed product technology, and in-process research and development ("IPR&D") were valued using the multi-period excess earnings method. Significant judgment was applied in estimating the fair value of the intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the timing and amounts of cash flow projections, including revenue growth rates, projected profit margins, and discount rates. Pro Forma Impact of Business Combinations The following table presents unaudited pro forma information as if the HRA Pharma acquisition had occurred on January 1, 2021 and had been combined with the results reported in our Consolidated Statements of Operations for all periods presented (in millions):
| Three Months Ended |  | Six Months Ended
(Unaudited) | July 2, 2022 |  | July 3, 2021 |  | July 2, 2022 |  | July 3, 2021
Net sales | $ | 1,151.3 |  |  | $ | 1,069.2 |  |  | $ | 2,304.7 |  |  | $ | 2,146.2 |
Income (loss) from continuing operations(1) | $ | (39.5) |  |  | $ | (123.6) |  |  | $ | (42.6) |  |  | $ | (213.8) |
(1) Includes $66.3 million of nonrecurring acquisition-related charges for the six months ended July 3, 2021. The unaudited pro forma information is presented for information purposes only and is not indicative of the results that would have been achieved if the acquisition had taken place at such time. The unaudited pro forma information presented above includes adjustments primarily for amortization charges for acquired intangible assets, depreciation of property, plant and equipment that have been revalued, certain acquisition-related charges, and related tax effects. Divestitures During the Six Months Ended July 2, 2022 On March 9, 2022, we completed the sale of our Latin America businesses to Advent International for total consideration of $23.9 million, consisting of $5.4 million in cash, installment receivables due 12 and 18 months from completion totaling $11.3 million based on the Mexican peso exchange rate at the time of sale, and contingent consideration of $7.2 million based on the Brazilian real exchange rate at the time of sale. The sale resulted in a pre-tax loss of $1.4 million, net of professional fees, recorded in Other operating expense, net on the Condensed Statements of Operations. On March 24, 2022, we completed the sale of ScarAway®, a leading U.S. OTC scar management brand, to Alliance Pharmaceuticals Ltd. for cash consideration of $20.7 million. The sale resulted in a pre-tax gain of $3.6 million recorded in our CSCA segment in Other operating expense, net on the Condensed Statements of Operations. Divestitures During the Year Ended December 31, 2021 RX business Refer to Note 8 - Discontinued Operations for details on the sale of the RX business.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration