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Note 3 - Business Combinations and Acquisitions | 6 Months Ended
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Jun. 30, 2026
Notes to Financial Statements |
Business Combination [Text Block] | 3. BUSINESS COMBINATIONS AND ACQUISITIONS SEPARATION AND ACQUISITION OF ASSETS OF SLIC JOINT VENTURE On January 31, 2024, we completed the planned separation and acquisition of assets of Shanghai Lianheng Isocyanate Company Ltd. (“SLIC”), our former manufacturing joint venture with BASF and three Chinese chemical companies for approximately $218 million. The final purchase price of the acquired assets was determined based on an asset valuation that was completed in the second quarter of 2024. During the third quarter of 2024, we received approximately $64 million of cash from SLIC, of which $34 million was a dividend and $30 million was an interim liquidating distribution. Upon the full liquidation of the joint venture during the first quarter of 2025, all remaining cash of SLIC, primarily resulting from the proceeds received by SLIC, was distributed back to the joint venture partners. As such, during the first quarter of 2025, we received approximately $41 million of cash from SLIC, which was our final liquidating distribution. The acquisition has been integrated into our Polyurethanes segment. Transaction costs related to this acquisition were not material during 2024. We have accounted for the acquisition using the acquisition method. As such, we analyzed the fair value of net assets acquired. The allocation of acquisition cost to the assets and liabilities acquired is summarized as follows (dollars in millions):
Fair value of assets acquired: |  |  |  |
Accounts receivable |  | $ | 20 |
Inventories |  |  | 10 |
Property, plant and equipment |  |  | 231 |
Other long-term assets |  |  | 24 |
Deferred income taxes |  |  | 1 |
Operating lease right-of-use assets |  |  | 3 |
Noncurrent operating lease liabilities |  |  | (3 | )
Total |  | $ | 286 |
The total fair value of the net assets acquired was in excess of the acquisition cost resulting in net gains of approximately $51 million recognized during 2024 and approximately $5 million recognized during the first quarter of 2025. Concurrent with the acquisition of net assets, we wrote off certain prepaid assets of approximately $71 million during 2024 related to operating agreements with SLIC and other joint venture partners. According to the operating agreement of the joint venture, SLIC sold all of its output to the joint venture partners with no external sales. After the separation and acquisition of assets, we use all of the output of the acquired assets for internal use. As such, the acquired business has no external revenues or net income.

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