Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

5. Acquisitions and Divestitures

A. Acquisitions

During the third quarter of 2023, we acquired 100% of the issued share capital of PetMedix Ltd. (PetMedix), a privately held research and development stage animal health biopharmaceutical company based in the United Kingdom, which develops antibody-based therapeutics for companion animals. The purchase price included upfront cash consideration of $111 million, excluding $19 million of cash acquired, $5 million in cash withheld for customary post-closing adjustments, and contingent consideration up to $100 million based on the achievement of certain milestones. There are additional contingent payments to be made to the seller upon receipt of payments from a third party related to a preexisting collaboration arrangement between PetMedix and the third party. The initial fair value assessment of the contingent consideration and additional contingent payments is not material and the transaction did not have a material impact on our condensed consolidated financial statements.

During the third quarter of 2023, we also completed the acquisition of adivo GmbH (adivo), a privately held research and development stage animal health biopharmaceutical company based in Germany. The transaction did not have a material impact on our condensed consolidated financial statements.

B. Divestitures

During the second quarter of 2024, we entered into a definitive agreement where Phibro Animal Health will acquire Zoetis’ medicated feed additive product portfolio, certain water soluble products and related assets for $350 million, subject to customary closing adjustments. Net assets and liabilities related to the sale met all the criteria to be classified as held for sale during the second quarter of 2024. We have determined that this future divestiture does not qualify for reporting as a discontinued operation, as it does not represent a strategic shift that has or will have a major effect on our operations and/or financial results. Proceeds upon the closing of this transaction were received in the fourth quarter of 2024. See Note 17. Subsequent Event for additional information.

As of September 30, 2024, major classes of assets held for sale and liabilities associated with assets held for sale are summarized below:


	September 30,
(MILLIONS OF DOLLARS)	2024
Assets held for sale
Accounts receivable, less allowance for doubtful accounts	$	1
Inventories	162
Other current assets	2
Property, plant and equipment, less accumulated depreciation	108
Operating lease right-of-use assets	2
Goodwill(a)	12
Identifiable intangible assets, less accumulated amortization	26
Noncurrent deferred tax assets	2
Other noncurrent assets	9
Loss on assets held for sale(a)	(10)
Total Assets Held for Sale	$	314

Liabilities associated with assets held for sale
Accounts payable	$	11
Accrued expenses	8
Accrued compensation and related items	1
Other noncurrent liabilities	6
Total Liabilities Associated with Assets Held for Sale	$	26

(a) We recorded a loss on assets held for sale of $22 million in the Condensed Consolidated Statements of Income during the nine months ended September 30, 2024. Of the loss on assets held for sale, $12 million is allocated to goodwill and the remaining $10 million relates to selling costs to be recognized upon closing and foreign currency translation losses to be reclassified out of accumulated other comprehensive income into earnings upon closing of the transaction.

During the second quarter of 2023, we received net cash proceeds of $93 million ($99 million sales proceeds, net of cash sold of $6 million) for the sale of a majority interest in our pet insurance business, Pumpkin Insurance Services. We recorded a net pre-tax gain of $101 million within Other (income)/deductions—net, which includes $24 million related to the remeasurement of our retained noncontrolling investment to fair value. We also completed the divestiture of Performance Livestock Analytics, part of our precision animal health business in the third quarter of 2023. The transaction did not have a material impact on our condensed consolidated financial statements.