Assets and Liabilities Held For Sale

3 Months Ended

Mar. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Note 2. Assets and Liabilities Held For Sale

Heart Valves

On December 2, 2020, LivaNova entered into a Share and Asset Purchase Agreement (“Purchase Agreement”) with Mitral Holdco S.à r.l. (the “Purchaser”), a company incorporated under the laws of Luxembourg and wholly owned and controlled by funds advised by Gyrus Capital S.A., a Swiss private equity firm. The Purchase Agreement provides for the divestiture of certain of LivaNova’s subsidiaries as well as certain other assets and liabilities relating to the Company’s Heart Valve business and site management operations conducted by the Company’s subsidiary LivaNova Site Management S.r.l. (“LSM”) at the Company’s Saluggia campus. The purchase price of €60.0 million (approximately $70.4 million as of March 31, 2021) will be payable in two tranches: €50.0 million (approximately $58.7 million as of March 31, 2021) payable at closing, subject to customary trade working capital and net indebtedness adjustments, as set forth in the Purchase Agreement, and an additional €10.0 million (approximately $11.7 million as of March 31, 2021) payable on December 30, 2022.

On April 9, 2021, LivaNova and the Purchaser entered into an Amended and Restated Share and Asset Purchase Agreement (the “A&R Purchase Agreement”) which amends and restates the original Purchase Agreement to, among other things, defer the closing of the sale and purchase of LSM by up to two years and include or amend certain additional terms relating to such deferral, including certain amendments relating to the potential hazardous substances liabilities of LSM and the related expense reimbursement provisions.

In addition, the A&R Purchase Agreement includes certain amendments relating to mechanics and timing for the initial closing of the transaction and subsequent closings of the local businesses. The initial closing of the transaction with respect to the heart valve business is expected to occur in the first half of 2021.

As a result of entering into the Purchase Agreement, during the fourth quarter of 2020 the Company concluded that the assets and liabilities of the Heart Valve business being sold meet the criteria to be classified as held for sale. As a result, we recognized an impairment of $180.2 million during the fourth quarter of 2020 to record the Heart Valves disposal group at fair value less estimated cost to sell. During the first quarter of 2021 we increased the carrying value of the disposal group by $1.0 million.

The major classes of assets and liabilities held for sale on the consolidated balance sheet as of March 31, 2021 and December 31, 2020 were as follows (in thousands):


	March 31, 2021		December 31, 2020
Accounts receivable, net	$	20,280	$	20,059
Inventories	44,623		45,081
Prepaid and refundable taxes	2,901		2,751
Prepaid expenses and other current assets	2,488		2,436
Property, plant and equipment, net	24,672		25,042
Intangible assets, net	150,197		153,632
Deferred tax assets	—		—
Operating lease assets	1,508		1,698
Impairment charge of disposal group	(179,194)		(180,160)
Total assets held for sale	$	67,475	$	70,539

Accounts payable	$	7,492	$	9,518
Accrued liabilities and other	3,743		4,205
Taxes payable	543		363
Accrued employee compensation and related benefits	8,829		8,781
Deferred tax liabilities	614		671
Long-term employee compensation and related benefits	5,038		4,994
Long-term operating lease liabilities	531		841
Other long-term liabilities	328		306
Total liabilities held for sale	$	27,118	$	29,679