Acquisitions

12 Months Ended

Dec. 31, 2023

ACQUISITIONS

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s Consolidated Financial Statements. This goodwill arises because the purchase prices for these businesses exceeds the fair value of acquired identifiable net assets due to the purchase prices reflecting a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance the Company’s existing product offerings to key target markets and enter into new and profitable businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that are deemed reasonable by the Company. Significant assumptions include the discount rates and certain assumptions that form the basis of the forecasted results of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates and technology obsolescence rates. These assumptions are forward looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who review the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment.

The following briefly describes the Company’s acquisition activity for the three years ended December 31, 2023.

On December 6, 2023, the Company acquired Abcam plc (“Abcam”) for a cash purchase price of approximately $5.6 billion (the “Abcam Acquisition”). Abcam is a leading global supplier of protein consumables, including highly validated antibodies, reagents, biomarkers and assays to address targets in biological pathways that are critical for

advancing drug discovery, life sciences research and diagnostics. Abcam is now part of the Company’s Life Sciences segment. Abcam generated revenues of approximately £362 million in 2022. The acquisition of Abcam has provided and is expected to provide the Company additional sales and earnings opportunities in the proteomics sector. The Company financed the Abcam Acquisition using cash on hand. The Company preliminarily recorded approximately $3.9 billion of goodwill related to the Abcam Acquisition. The Company is continuing to evaluate certain pre-acquisition contingencies associated with its 2023 acquisition of Abcam (due to the acquisition’s open measurement period) and is also in the process of obtaining valuations of certain acquisition-related assets and liabilities in connection with the acquisition. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

During 2022, the Company acquired 7 businesses for total consideration of $582 million in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company’s three segments. The Company preliminarily recorded an aggregate of $389 million of goodwill related to these acquisitions. The aggregate annual sales of the 7 businesses acquired in 2022, at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $58 million.

On August 30, 2021, the Company acquired Aldevron, L.L.C. (“Aldevron”) for a cash purchase price of approximately $9.6 billion (the “Aldevron Acquisition”). Aldevron manufactures high-quality plasmid DNA, mRNA and proteins, serving biotechnology and pharmaceutical customers across research, clinical and commercial applications, and is now part of the Company’s Life Sciences segment. Aldevron generated revenues of approximately $300 million in 2020. The acquisition of Aldevron has provided and is expected to provide additional sales and earnings opportunities for the Company by expanding product line diversity, including new product offerings supporting genomic medicine. The Company financed the Aldevron Acquisition using cash on hand and proceeds from the issuance of commercial paper. The Company recorded approximately $6.1 billion of goodwill related to the Aldevron Acquisition.

During 2021, in addition to the Aldevron Acquisition, the Company acquired 11 businesses for total consideration of approximately $1.3 billion in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company’s three segments. The Company recorded an aggregate of approximately $1.0 billion of goodwill related to these acquisitions. The aggregate annual sales of the 11 other businesses acquired in 2021 at the time of their acquisition, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $96 million.

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition ($ in millions):


	2023		2022		2021
Trade accounts receivable	$	86	$	4	$	64
Inventories	94		7		119
Property, plant and equipment	158		9		162
Goodwill	3,851		389		7,187
Other intangible assets, primarily developed technology, trade names and customer relationships	2,146		200		4,009
Trade accounts payable	(32)		(1)		(23)

Deferred tax liabilities	(519)		(10)		(365)
Other assets and liabilities, net	(49)		(16)		(177)
Net assets acquired	5,735		582		10,976
Less: noncash consideration	(125)		—		(75)
Net cash consideration	$	5,610	$	582	$	10,901

The following summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisition in 2021 discussed above, and all of the other 2021 acquisitions as a group ($ in millions):


	Aldevron		Other		Total
Trade accounts receivable	$	46	$	18	$	64
Inventories	93		26		119
Property, plant and equipment	150		12		162
Goodwill	6,149		1,038		7,187
Other intangible assets, primarily developed technology, trade names and customer relationships	3,483		526		4,009
Trade accounts payable	(15)		(8)		(23)

Deferred tax liabilities	(249)		(116)		(365)
Other assets and liabilities, net	(73)		(104)		(177)

Net assets acquired	9,584		1,392		10,976
Less: noncash consideration	(23)		(52)		(75)
Net cash consideration	$	9,561	$	1,340	$	10,901

Transaction-related costs for the Abcam Acquisition were $27 million for the year ended December 31, 2023 and for the Aldevron Acquisition were $28 million for the year ended December 31, 2021. The Company’s earnings for 2023 also reflect the pretax impact of $68 million of non-recurring acquisition date fair value adjustments to inventory and the settlement of pre-acquisition share-based payment awards, both related to the Abcam Acquisition. The Company’s earnings for 2021 also reflect the pretax impact of $30 million of non-recurring acquisition date fair value adjustments to inventory related to the Aldevron Acquisition. In addition, the Company’s earnings for 2021 reflect the pretax impact of $46 million of non-recurring acquisition date fair value adjustments to inventory and deferred revenue related to the acquisition of Cytiva in 2020. Transaction-related costs and acquisition-related fair value adjustments attributable to other acquisitions were not material for the years ended December 31, 2023, 2022 or 2021.

Pro Forma Financial Information (Unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the 2023 and 2022 acquisitions as if they had occurred as of January 1, 2022, including the results from operations for the acquired business as well as the impact of assumed financing of the transaction and the impact of the purchase price allocation (including the amortization of acquired intangible assets). The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions except per share amounts):


	2023		2022
Sales	$	24,335	$	27,132
Net earnings from continuing operations	4,181		6,064
Diluted net earnings per common share from continuing operations (a)	5.60		8.11

(a) Diluted net earnings from continuing operations is calculated by taking net earnings from continuing operations and deducting the anti-dilutive MCPS dividends.

The 2023 unaudited pro forma net earnings from continuing operations set forth above were adjusted to exclude the pretax impact of $68 million of non-recurring acquisition date fair value adjustments to inventory and the settlement of pre-acquisition share-based payment awards related to the Abcam Acquisition. The 2022 unaudited pro forma net earnings from continuing operations were adjusted to include the impact of these items. In addition, acquisition-related transaction costs of $27 million pretax for the year ended December 31, 2023 associated with the Abcam Acquisition were excluded from pro forma net earnings from continuing operations.