Divestitures and Equity Method Investment

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Divestiture and Equity Method Investments

5. DIVESTITURES AND EQUITY METHOD INVESTMENTS

Divestitures

During the year ended December 31, 2020, we completed the divestiture of scil to Heska Corporation for $110 million pursuant to an amended purchase agreement. We recorded a pre-tax gain of $73 million included in other, net in our consolidated statements of operations which reflects a $1 million foreign exchange adjustment for the finalization of the purchase price. It was primarily included within our Europe segment.

Equity Method Investments

On April 30, 2020, we completed the combination of our subsidiary, SAHS, with Distrivet, S.A. to form a leading animal-health provider on the Iberian Peninsula. We contributed SAHS by means of a in-kind contribution of all the shares of SAHS in exchange for the transfer of shares from shareholders of Distrivet, S.A. (“Distrivet Shareholders”). During the second quarter of 2020, we deconsolidated SAHS, remeasured our retained investment initially at a fair value of $45 million, which was included in investments in our consolidated balance sheets, and recognized a gain of $1 million, which was included in other, net in our consolidated statements of operations. The fair value was measured using third-party valuation models and was determined using both the market approach and income approach, which includes discounted expected cash flows.

We made a payment to the Distrivet Shareholders of approximately $13 million in cash on the one-year anniversary in April 2021. We own 50.01% of Distrivet.

Based on Distrivet's governance structure, we do not have power over key financial and operating decisions that are made in the ordinary course of business. Accordingly, our investment in Distrivet is accounted for under the equity method and Distrivet is considered a related party. See Note 18 - Related-Party Transactions. As of December 31, 2021, the carrying amount of our investment in Distrivet was $47 million which was included in Investments in our consolidated balance sheets.