EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

9 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

As discussed in Note 5, the Company completed the divestiture of a majority stake in Copeland on May 31, 2023, and received upfront, pretax cash proceeds of approximately $9.7 billion and a note receivable with a face value of $2.25 billion, while retaining a 40 percent non-controlling common equity interest in Copeland.

On June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and the note receivable to Copeland for $1.9 billion. The equity interest and note receivable, as well as $33 of future indemnity obligations included in Other liabilities (net of tax), are reported as held-for-sale as of June 30, 2024. Subsequent to the end of the quarter, the Company completed the sale of the note receivable on August 2, 2024 and received $1.9 billion of pretax cash proceeds. The sale of the equity interest is expected to close by the end of August 2024.

The Company recognized non-cash interest income on the note receivable (through the date of the agreement) of $24 and $86 for the three and nine months ended June 30, 2024, respectively, which is reported in Interest income from related party within continuing operations and capitalized to the carrying value of the note. Upon entering into the note agreement, the Company recorded a pretax loss of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to $1.9 billion to reflect the transaction price.

The Company's share of Copeland's income or loss, which will continue to be recorded using the equity method of accounting until the transaction is completed, is now reported in discontinued operations for all periods presented (see Note 5). As of June 30, 2024, the carrying value of the retained equity investment was $1,008. Summarized financial information for Copeland for the three and nine months ended June 30, 2024 is as follows.


	Three Months Ended June 30,		Nine Months Ended June 30,
	2024		2024
Net sales	$	1,259	$	3,458
Gross profit	$	441	$	1,198
Income (loss) from continuing operations	$	(40)	$	(280)
Net income (loss)	$	(40)	$	(280)
Net income (loss) attributable to shareholders	$	(40)	$	(278)