Acquisitions

3 Months Ended

Nov. 30, 2020

Pharmaceutical wholesale business in Germany

On November 1, 2020, the Company and McKesson Corporation closed a transaction to form a combined pharmaceutical wholesale business in Germany, as part of a strategic alliance. The Company owns a 70% controlling equity interest in the combined business which is consolidated by the Company and reported within the Pharmaceutical Wholesale segment in its financial statements. The Company accounted for this acquisition as a business combination involving noncash purchase consideration of $291 million consisting of the issuance of an equity interest in the combined business.

As of November 30, 2020 the Company had not completed the analysis to determine the fair value of the consideration paid or to assign fair values to all tangible and intangible assets acquired, and therefore the purchase price allocation has not been completed. The preliminary purchase price allocation will be subject to further refinement and may result in material changes. These changes will primarily relate to finalization of the fair value of the purchase consideration consisting of the issuance of an equity interest in the combined business and the allocation of purchase consideration and the fair value assigned to all tangible and intangible assets acquired and identified. The following table summarizes the consideration for the acquisition and the preliminary amounts of identified assets acquired and liabilities assumed at the date of the transaction (in millions):


Purchase Price Allocation:
Total Consideration	$	313
Identifiable assets acquired and liabilities assumed
Accounts receivable, cash and other assets	563
Inventories	470
Property, plant and equipment	125
Short term debt	(295)
Trade accounts payable, accrued expenses and other liabilities	(356)
Other noncurrent liabilities	(197)
Total identifiable net assets	310
Goodwill	$	3

In accordance with ASC Topic 810, Consolidation, the noncontrolling interest was recognized based on its proportionate interest in the identifiable net assets of the combined business. The difference between the carrying amount of the non-controlling interest and the fair value of the consideration in the business combination is recognized as additional paid in capital. Considering the contractual terms related to the noncontrolling interest, it is classified as redeemable noncontrolling interest in the consolidated condensed balance sheets. See Note 18, Supplemental information for more details on redeemable noncontrolling interest.

Pro forma net earnings and sales of the Company, assuming the acquisition had occurred at the beginning of each period presented, would not be materially different from the results reported. The acquisition did not have a material impact on net earnings or sales of the Company for the quarter ended November 30, 2020.

Other acquisitions

The Company acquired certain prescription files and related pharmacy inventory primarily in Retail Pharmacy USA for the aggregate purchase price of $38 million and $80 million during the three months ended November 30, 2020 and 2019, respectively.