Dispositions

12 Months Ended

Dec. 31, 2023


Note 3:			Dispositions

Sale of Joint Venture Equity Interest in Samsung Bioepis

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics in exchange for total consideration of approximately $2.3 billion. Under the terms of this transaction, we received approximately $1.0 billion in cash at closing, with approximately $1.3 billion in cash to be deferred over two payments. The first deferred payment of $812.5 million was received in April 2023 and the second deferred payment of $437.5 million is due at the second anniversary of the closing of this transaction in April 2024.

Prior to the sale, the carrying value of our investment in Samsung Bioepis totaled $581.6 million. For the year ended December 31, 2022, we recognized a pre-tax gain of approximately $1.5 billion related to this transaction, which was recorded in other (income) expense, net in our consolidated statements of income. This pre-tax gain included reclassifications from AOCI to net income of approximately $58.9 million in cumulative translation losses, partially offset by approximately $57.0 million in gains resulting from the termination of our net investment hedge.

We concluded that the divestment of Samsung Bioepis did not meet the criteria to be reported as discontinued operations in our consolidated financial statements, as our decision to divest this business did not represent a strategic shift that would have a major effect on our operations and financial results.

We elected the fair value option and measured the payments due to us from Samsung BioLogics at fair value. As of December 31, 2023, the estimated fair value of the remaining second deferred payment using a risk-adjusted discount rate of 5.8% was approximately $430.0 million. This payment has been classified as a Level 3 measurement and is reflected in other current assets within our consolidated balance sheets as of December 31, 2023.

For the year ended December 31, 2023, we recognized a gain of approximately $13.7 million to reflect the change in fair value related to the first deferred payment due to us, which was received in April 2023. Additionally, for the year ended December 31, 2023, we recognized a gain of approximately $24.6 million to reflect the change in fair value related to the second deferred payment due to us. For the year ended December 31, 2022, we recognized a gain of approximately $10.7 million and a loss of approximately $1.4 million to reflect the changes in fair value related to the first and second deferred payments due to us, respectively. These changes were recorded in other (income) expense, net within our consolidated statements of income.

As part of this transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Our policy for contingent payments of this nature is to recognize the payments in the period the payments become realizable, which is generally the same period in which the payments are earned.

If any payments due to us remain outstanding after the second anniversary of the closing of this transaction, we may elect to receive shares of Samsung BioLogics common stock at a 5.0% discount in lieu of a cash payment for the remaining amount due. Currently, we believe that the likelihood of Samsung BioLogics failing to make the second deferred payment due to us is remote.

Additionally, for the year ended December 31, 2022, we recorded a discrete tax expense of approximately $257.9 million related to this transaction, which is reflected in income tax (benefit) expense in our consolidated statements of income.