Acquisitions and Dispositions

6 Months Ended

Jun. 27, 2020

Business Combinations [Abstract]

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, primarily 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.

Pending Acquisition

On March 3, 2020, the company entered into a purchase agreement to acquire all of the issued and outstanding shares of QIAGEN N.V. at a price of €39 per share. On July 16, 2020, the agreement was amended to, among other things, increase the offer price to €43 per share or approximately $12.7 billion (based on exchange rates at the time of the amendment), which includes the assumption of approximately $1.2 billion of net debt. QIAGEN is a leading provider of life science and molecular diagnostic solutions that will expand the company’s capabilities in these fields. QIAGEN reported 2019 revenues of $1.5 billion. The company commenced a tender offer to acquire all of the ordinary shares of QIAGEN. The transaction is expected to close during the first half of 2021, subject to the satisfaction of customary closing conditions including receipt of applicable regulatory approvals, and completion of the tender offer.

The company intends to finance the purchase price, including the repayment of indebtedness of QIAGEN, with cash on hand and the net proceeds from issuances of debt. The company has also entered into a €3.0 billion senior unsecured one-year term loan to be drawn at the closing of the QIAGEN acquisition. The company is currently evaluating other future debt financings and the timing of such transactions is subject to market and other conditions. The company also has available, but does not currently expect to utilize, up to €6.25 billion of committed bridge financing (Note 7).

DispositionOn 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 in the second quarter of 2019, included in restructuring and other costs (income), net. Revenues in 2019, through the date of sale, of the business sold were approximately $115 million, net of retained sales through the company's healthcare market channel business.