Acquisitions and Dispositions

6 Months Ended

Jun. 29, 2019

Acquisitions and Dispositions [Text Block]

Note 2.

Acquisitions and Dispositions

The company’s acquisitions have historically been made at prices above the determined fair value of the acquired identifiable net assets, resulting in goodwill, due to expectations of the synergies that will be realized by combining the businesses. These synergies include the elimination of redundant facilities, functions and staffing; use of the company’s existing commercial infrastructure to expand sales of the acquired businesses’ products; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand sales of company products.

Acquisitions have been accounted for using the acquisition method of accounting, and the acquired companies’ results have been included in the accompanying financial statements from their respective dates of acquisition. Acquisition transaction costs are recorded in selling, general and administrative expenses as incurred.

On April 30, 2019, the company acquired, within the Laboratory Products and Services segment, Brammer Bio for approximately $1.67 billion in cash. Brammer Bio is a leading viral vector contract development and manufacturing organization for gene and cell therapies. The acquisition expands the segment's contract manufacturing capabilities. Revenues of Brammer Bio were approximately $140 million in 2018. The purchase price exceeded the fair value of the identifiable net assets and, accordingly, $952 million was allocated to goodwill, $411 million of which is tax deductible.

In addition, in 2019 the company acquired, within the Analytical Instruments segment, a Slovakia-based provider of mass spectrometry software used for identification of compounds, for an aggregate purchase price of $14 million.

The components of the purchase price and net assets acquired for Brammer Bio are as follows:



(In millions)	Brammer Bio

Purchase Price
Cash paid	$	1,709
Cash acquired	(36		)

	$	1,673

Net Assets Acquired
Current assets	$	52
Property, plant and equipment	148
Definite-lived intangible assets:
Customer relationships	744
Product technology	44
Tradenames	7
Goodwill	952
Other assets	49
Contract liabilities	(110		)
Deferred tax liabilities	(105		)
Other liabilities assumed	(108		)

	$	1,673

The weighted-average amortization periods for definite-lived intangible assets acquired in 2019 are 14 years for customer relationships, 13 years for product technology and 2 years for tradenames. The weighted average amortization period for all definite-lived intangible assets acquired in 2019 is 14 years.

The preliminary allocation of the purchase price for Brammer Bio was based on estimates of the fair value of the net assets acquired and is subject to adjustment upon finalization of the valuation of the acquired intangible assets and the related deferred taxes. Measurements of these items inherently require significant estimates and assumptions. The company expects to complete the valuation in the third quarter of 2019.

In 2018, the company entered into an agreement to acquire Gatan, Inc., a wholly owned subsidiary of Roper Technologies, Inc. In June 2019, as publicly announced, Roper Technologies and the company agreed to withdraw from the proposed transaction.

Disposition

On June 28, 2019, the company sold its Anatomical Pathology business to PHC Holdings Corporation for $1.13 billion, net of cash divested. The business was part of the Specialty Diagnostics segment. The sale of this business resulted in a pre-tax gain of approximately $505 million, included in restructuring and other (income) costs, net. Revenues in 2019, through the date of sale, and the full year 2018 of the business sold were approximately $115 million and $238 million, respectively, net of retained sales through the company's healthcare market channel business. The assets and liabilities of the Anatomical Pathology business were as follows on December 31, 2018:



(In millions)	December 31, 2018

Current Assets	$	81
Long-term Assets	528
Current Liabilities	34
Long-term Liabilities	24