Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary amounts recognized for assets acquired and liabilities assumed as of the acquisition date:

Estimated Fair Value at August 27, 2021
Cash and cash equivalents	$	31
Other net working capital	9
Property and equipment	33
Intangible assets, primarily acquired in-process research and development (IPR&D)	334
Deferred income taxes, net	(22)
Total identifiable net assets	385
Goodwill	33
Settlement of liability related to previous license agreement	26
Total consideration transferred	$	444

The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:

Estimated Fair Value at August 1, 2020
Cash and cash equivalents	$	169
Accounts receivable	10
Inventories	487
Prepaid expenses and other current assets	60
Property and equipment	315
Intangible assets:
Acquired in-process research and development	65
Marketed products	3,740
Assets held for sale	138
Accounts payable and accrued liabilities	(237)
Accrued retirement benefits	(220)
Other noncurrent assets and liabilities - net	(878)
Total identifiable net assets	3,649
Goodwill	3,129
Total consideration transferred	$	6,778

The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the acquisition date:

Estimated Fair Value at July 18, 2019
Cash and cash equivalents	$	26
Inventories	10
Acquired in-process research and development	32
Marketed products (1)	37
Other intangible assets (1)	13
Other assets and liabilities - net	4
Total identifiable net assets	122
Goodwill (2)	31
Settlement of existing contingent consideration liabilities	85
Total consideration transferred	$	238

(1)These intangible assets, which are being amortized on a straight-line basis over their estimated useful lives, are expected to have a weighted average useful life of approximately 13 years.

(2)The goodwill recognized from this acquisition is attributable primarily to expected synergies from combining the operations of Aratana with our legacy business. The majority of goodwill associated with this acquisition is not deductible for tax purposes.

The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the acquisition date:

Estimated Fair Value at July 31, 2019
Cash and cash equivalents	$	1
Acquired in-process research and development	3
Marketed products(1)	59
Other intangible assets	1
Other assets and liabilities - net	(9)
Total identifiable net assets	55
Goodwill (2)	10
Total consideration transferred	$	65

(1)These intangible assets, which are being amortized on a straight-line basis over their estimated useful lives, are expected to have a weighted average useful life of 10 years.

(2)The goodwill recognized from this acquisition is attributable primarily to expected synergies from combining the operations of Prevtec with our legacy business and future unidentified projects and products. The goodwill associated with this acquisition is not deductible for tax purposes.

Purchase Consideration

Total consideration transferred to Bayer and its subsidiaries for the acquisition is summarized as follows:

Cash consideration (1)	$	5,054
Fair value of Elanco common stock (2)	1,724
Fair value of total consideration transferred	$	6,778

(1)Includes initial cash consideration of $5,170 million less working capital and tax adjustments of $116 million.

(2)Represents the acquisition date fair value of 73 million shares of Elanco common stock at $23.64 per share. Per the terms of the stock and asset purchase agreement, the number of shares was based on approximately $2.3 billion divided by the 20-day volume-weighted average stock price as of the last day of trading before the closing of the acquisition (but subject to a 7.5% symmetrical collar centered on the baseline share number of approximately $2.3 billion divided by an initial share price of $33.60).

Pro Forma Information

The following table presents the estimated unaudited pro forma combined results of Elanco, Bayer Animal Health and Aratana for the years ended December 31, 2020 and 2019 as if the acquisitions had occurred on January 1, 2019:

	Year Ended December 31,
	2020		2019
Revenue	$	4,441	$	4,691
Loss before income taxes	(675)		(160)

Divestitures Activities

Assets and liabilities considered held for sale in connection with the above divestitures were included in the respective line items on the consolidated balance sheet as follows:

	December 31, 2021		December 31, 2020
Inventories	$	31	$	2
Other intangibles, net	—		4
Property and equipment, net	50		—
Deferred tax asset	—		1
Total assets held for sale	$	81	$	7