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Business Divestitures
 6 Months Ended
Jun. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]  
Business Divestitures BUSINESS DIVESTITURES
Divestiture of a Portion of the Savory Solutions Business
During the fourth quarter of 2022, the Company announced it had entered into an agreement to sell a portion of its Savory Solutions business, which was part of the Nourish segment. The Company completed the divestiture on May 31, 2023, and received cash proceeds of approximately $840 million. In addition, a receivable of approximately $30 million was recorded which reflects the estimated future payment to be received as part of the sale consideration. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances.
The following table summarizes the fair value of sale consideration received in connection with the divestiture:
(DOLLARS IN MILLIONS)
Cash proceeds from the buyer$840 
Receivable from the buyer30 
Direct costs to sell(20)
Fair value of sale consideration$850 
The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration reduced by the amount receivable from the buyer and the cash transferred to the buyer as part of the transaction. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
(DOLLARS IN MILLIONS)
Fair value of sale consideration$850 
Receivable from the buyer(30)
Cash transferred to the buyer (including restricted cash)(19)
Direct costs to sell (to be paid in the quarter ending September 30, 2023)20 
Net proceeds received from business divestiture$821 
The carrying amount of net assets associated with the business unit, adjusted for currency translation and pension adjustments, was approximately $860 million. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS)May 31, 2023
Assets
Cash and cash equivalents$15 
Restricted cash4 
Trade receivables, net69 
Inventories116 
Property, plant and equipment, net77 
Goodwill317 
Other intangible assets, net367 
Right-of-use assets20 
Other assets24 
Total assets1,009 
Liabilities
Accounts payable(44)
Deferred tax liability(92)
Other liabilities(54)
Total liabilities(190)
Equity
Accumulated other comprehensive income - currency translation adjustment42 
Accumulated other comprehensive income - pension liability and postretirement(1)
Total equity41 
Carrying value of net asset (adjusted for currency translation and pension adjustments)$860 
As a result of the divestiture, the Company recognized a pre-tax loss of approximately $10 million, subject to certain post-closing adjustments, presented in Other (income) expense, net on the Consolidated Statements of Income and Comprehensive Income (Loss) for the three and six months ended June 30, 2023. The Company also recognized the income tax effects associated with the transaction of approximately $7 million based on preliminary estimates as of June 30, 2023.
The Company has recognized income tax effects associated with the divestiture across multiple periods in connection with internal restructuring prior to the external sale transaction. Based on preliminary estimates, the total income taxes recognized was approximately $88 million, with approximately $72 million that was recognized during the year ended December 31, 2022.
Liquidation of a Business in Russia
As part of the liquidation of a business in Russia for the sale of the portion of the Savory Solutions business, the Company recognized a pre-tax loss of approximately $10 million presented in the Other (income) expense, net, and tax benefits of approximately $2 million presented in Provision for income taxes on the Consolidated Statements of Income and Comprehensive Income (Loss) for the six months ended June 30, 2023.
Divestiture of Microbial Control
The Company completed the divestiture of the Microbial Control business unit on July 1, 2022, which was acquired as part of the Company’s merger with Nutrition and Biosciences, Inc. (“N&B”), a wholly-owned subsidiary of DuPont, in 2021 (the “Merger”), and received net cash proceeds of approximately $1.169 billion. The Company also entered into transition services agreements with the buyer for providing certain general accounting, information technology and other services up to 19 months following the date of the sale for minimal consideration. The fair value of these transition services agreements was determined to be approximately $36 million, which was adjusted against the sale consideration and recognized as deferred transition services income. For the three and six months ended June 30, 2023, the transition services income under the transition services agreements was approximately $8 million and $13 million, respectively, and was recognized as a reduction to the costs incurred to provide services under the transition services agreements, which was included in Selling and administrative expenses on the Consolidated Statements of Income and Comprehensive Income (Loss).
Subsequent Event
The Company completed the divestiture of its Flavor Specialty Ingredients business on August 1, 2023. Upon closing, the Company received net cash proceeds of approximately $205 million, including funds held in escrow, adjusted for the preliminary estimates of certain closing adjustments. Finalization of such closing adjustments may result in additional cash receipt or payment to the buyer.
ASSETS AND LIABILITIES HELD FOR SALE
During the first quarter of 2023, the Company announced it had entered into an agreement to sell its Flavor Specialty Ingredients business within the Scent segment. The transaction was completed on August 1, 2023 (see the “Subsequent Event” section in Note 3 for additional information).
The sale does not constitute a strategic shift of the Company’s operations and does not, and will not, have major effects on the Company’s operations and financial results; therefore, the transaction does not meet the discontinued operations criteria.
It was determined that the assets and liabilities of the business met the criteria to be presented as “held for sale.” As a result, as of June 30, 2023 and December 31, 2022, such assets and liabilities were classified as held for sale and are reported on the Consolidated Balance Sheets. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the business. The carrying value is subject to change based on developments leading up to the closing date.
Included in the Company’s Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 are the following carrying amounts of the assets and liabilities held for sale:
(DOLLARS IN MILLIONS)June 30, 2023
December 31, 2022(2)
Assets
Cash and cash equivalents$3 $52 
Trade receivables, net15 85 
Inventories47 157 
Property, plant and equipment, net28 92 
Goodwill44 348 
Other intangible assets, net73 428 
Operating lease right-of-use assets— 13 
Other assets2 25 
Total assets held-for-sale$212 $1,200 
Liabilities
Accounts payable$9 $56 
Deferred tax liability(1)
— 92 
Other liabilities4 64 
Total liabilities held-for-sale$13 $212 
_______________________
(1)The Company is currently analyzing the tax impact of the sale transaction and has included preliminary numbers for the deferred tax liability, which are subject to further updates.
(2)The amounts for December 31, 2022 also include the carrying amounts of the portion of the Savory Solutions business that was classified as held for sale. The Company completed the divestiture of the business on May 31, 2023. Refer to Note 3 for additional information.