BUSINESS COMBINATIONS

3 Months Ended

Mar. 31, 2021

Acquisitions

2021 Transactions

On January 21, 2021, the effective date of the transaction, the Company paid $94 million with the potential for additional earn-out provision payments of up to $10 million, to acquire 100% of the outstanding shares of Datum Dental, Ltd., a privately-owned producer and distributor of specialized regenerative dental material based in Israel. The fair value of the earn-out provision has been valued at $9 million as of the transaction date, resulting in a total purchase price of $103 million.

The preliminary fair values of the assets acquired and liabilities assumed in connection with the Datum acquisition were as follows:


(in millions)

Cash and cash equivalents	$	2
Other current assets	2
Intangible assets	81
Current liabilities	(2)
Other long-term assets (liabilities), net	(13)
Net assets acquired	70
Goodwill	33
Purchase consideration	$	103

The purchase price has been allocated on the basis of the preliminary estimates of fair values of assets acquired and liabilities assumed, resulting in the recording of $33 million in goodwill, which is considered to represent the value associated with the acquired workforce and synergies the two companies anticipate realizing as a combined company. The goodwill is not expected to be deductible for tax purposes. Management is continuing to finalize its valuation of certain assets including other intangible assets and will conclude its valuation no later than one year from the acquisition date.

Identifiable intangible assets acquired were as follows:


			Weighted Average
			Useful Life
(in millions, except for useful life)	Amount		(in years)

Developed technology	$	70	15-20
In-process R&D	11		Indefinite
Total	$	81

2020 Transactions

On December 31, 2020, the effective date of the transaction, the Company acquired 100% of the outstanding interests of Straight Smile, LLC ("Byte"), a privately-held company, for approximately $1.0 billion using cash on hand. Byte is a doctor-directed, direct-to-consumer, clear aligner business. The acquisition is expected to enhance scale and accelerate the growth and profitability of the Company's combined clear aligners business.

The preliminary fair values of the assets acquired and liabilities assumed in connection with the Byte acquisition for the year ended December 31, 2020 were as follows:


(in millions)

Cash and cash equivalents	$	13
Current assets	17
Intangible assets	416
Current liabilities	(30)
Long-term assets (liabilities), net	1
Net assets acquired	417
Goodwill	628
Purchase consideration	$	1,045

The purchase price has been allocated on the basis of the preliminary estimates of fair values of assets acquired and liabilities assumed, which resulted in the recording of $628 million in goodwill. The amount of goodwill is considered to represent the value associated with the acquired workforce and synergies the two companies anticipate realizing as a combined company, including alignment with the Company’s existing clear aligner business, and is deductible for tax purposes. Measurement period adjustments made to the fair values of the assets acquired and liabilities assumed during the first quarter of 2021 were immaterial to the financial statements, resulting in a reduction to goodwill of less than $3 million. Final determination of consideration as well as valuation of certain current assets are subject to a post-closing adjustment for the change in working capital to the date of closing, which is expected to be completed by the end of the second quarter of 2021.

Intangible assets acquired were as follows:


			Weighted Average
			Useful Life
(in millions, except for useful life)	Amount		(in years)

Non-compete agreements	$	16	5
Technology know-how	210		10
Tradenames and trademarks	190		20
Total	$	416

The results of operations for both the Byte and Datum businesses upon the effective date of each transaction have been included in the accompanying financial statements. These results, as well as the historical results for the above acquired businesses for the periods ended March 31, 2021 and 2020, are not material in relation to the Company’s net sales and earnings for those periods. The Company therefore does not believe these acquisitions represent material transactions either individually or in the aggregate requiring the supplemental pro-forma information prescribed by ASC 805 and accordingly, this information is not presented.

Divestitures

On February 1, 2021, the company disposed of an investment casting business previously included as part of the Consumables segment in exchange for a cash receipt of $19 million. The divestiture resulted in a gain of $13 million recorded in Other expense (income), net in the Consolidated Statements of Operations for the three months ended March 31, 2021.