6.3 Divestitures, Material Sale Transactions and Discontinued Operation

Divestitures and material sale transactions in 2015

The effects of divestitures and material sale transactions made in 2015 and previous years on the consolidated financial statements were as follows:

On March 2, 2015, Consumer Health completed the sale of two equine products, Legend / Hyonate and Marquis, to Merial, Inc., Duluth, Georgia, United States. A purchase price of €120 million was agreed. The one-time payment is accounted for as deferred income. The purchase prices for Legend / Hyonate and Marquis will be reflected in sales and earnings over a four-year and a three-year period, respectively, as Bayer has entered into further significant obligations.

No assets or liabilities were derecognized in 2015 as a result of this divestiture.

Divested Assets and Liabilities

 

 

2014

 

2015

 

 

€ million

 

€ million

Goodwill

 

286

 

Patents and technologies

 

62

 

Other intangible assets

 

17

 

Property, plant and equipment

 

18

 

Other noncurrent assets

 

2

 

Inventories

 

10

 

Other current assets

 

 

Other provisions

 

 

Other liabilities

 

 

Divested net assets

 

395

 

Divestitures and material sale transactions in 2014

On August 29, 2014, Consumer Health completed the sale of the Interventional device business to Boston Scientific Corporation, Natick, Massachusetts, United States. The sale comprised the AngioJet™ thrombectomy system and the Jetstream™ atherectomy system, as well as the Fetch™2 aspiration catheter used in cardiology, radiology and peripheral vascular procedures. The total transaction price, including fees for transitional services to Boston Scientific and before Working capital is the difference between short-term current assets and short-term liabilities; it is calculated by deducting short-term liabilities from current assets (excluding cash and cash equivalents). In financial accounting, the change in working capital is one of the variables used to assess a company’s financial health. The objective of working capital management is to reduce working capital by minimizing the “financing gap” caused by the time lapse between the disbursement of funds (= payment for necessary raw materials) and the receipt of funds for the finished product. adjustments, was €315 million. Disregarding the transitional services, a special gain of €80 million was recognized in other operating income, and deferred income of €2 million was recognized in liabilities.

On October 1, 2014, the strategic pharmaceutical collaboration agreed between Bayer and Merck & Co., Inc., United States, in the area of soluble guanylate cyclase (sGC) modulation came into effect. Pharmaceuticals and Merck & Co., Inc. assumed joint control of the sGC modulators business. The collaboration agreement provides for future net Cash flow Key indicator for assessing a company’s financial strength; in addition to gross cash flow, the statement of cash flows also reports the cash flow from operating activities (net cash flow), which shows the amount of funds available from operating activities for financing investments, repaying debts or distributing dividends. The cash flows from investing and financing activities are also reported. to be equally shared between Bayer and Merck & Co., Inc. Of the goodwill allocated to the Pharmaceuticals segment, €173 million was derecognized through profit or loss as of the date the collaboration came into effect.

Discontinued operation

On June 8, 2015, an agreement was signed to sell the Diabetes Care business to Panasonic Healthcare Holdings Co., Ltd., Tokyo, Japan, for approximately €1 billion. The sale includes the leading Contour™ portfolio of blood glucose monitoring meters and strips, as well as other products such as Breeze™2, Elite™ and Microlet™ lancing devices. Implementation of the agreement began on January 4, 2016. Bayer has entered into further significant obligations, which are to be met over the next two years.

The Diabetes Care activities are reported as a Discontinued operations Business operations already divested or earmarked for divestiture in the near future; opposite of continuing operations . The respective information is provided from the standpoint of the Bayer Group and is not intended to present these activities as a separate entity.

The income statements for the discontinued operation are given below:

Income Statements for Discontinued Operations

 

 

2014

 

2015

 

 

€ million

 

€ million

1

EBIT = earnings before financial result and taxes

Net sales

 

900

 

947

Cost of goods sold

 

(357)

 

(380)

Gross profit

 

543

 

567

 

 

 

 

 

Selling expenses

 

(349)

 

(386)

Research and development expenses

 

(37)

 

(48)

General administration expenses

 

(38)

 

(36)

Other operating income / expenses

 

(8)

 

(20)

EBIT1

 

111

 

77

 

 

 

 

 

Financial result

 

 

 

 

 

 

 

Income before income taxes

 

111

 

77

 

 

 

 

 

Income taxes

 

(11)

 

3

 

 

 

 

 

Income after income taxes

 

100

 

80

The assets and liabilities of the discontinued operation are shown in the following table:

Assets and Liabilities of Discontinued Operations

 

 

Dec. 31, 2015

 

 

€ million

Noncurrent assets

 

 

Goodwill

 

36

Other intangible assets

 

4

Property, plant and equipment

 

8

 

 

48

Current assets

 

 

Inventories

 

135

 

 

135

 

 

 

Total assets

 

183

 

 

 

Noncurrent liabilities

 

 

Provisions for pensions and other post-employment benefits

 

23

 

 

23

Current liabilities

 

 

Other provisions

 

89

 

 

89

 

 

 

Total liabilities

 

112

In addition to the assets of the discontinued Diabetes Care business amounting to €183 million, the statement of financial position as of December 31, 2015, reflects a further €14 million in assets held for sale.

The Discontinued operations Business operations already divested or earmarked for divestiture in the near future; opposite of continuing operations affected the Bayer Group statement of cash flows as follows:

Cash Flows of Discontinued Operations

 

 

2014

 

2015

 

 

€ million

 

€ million

Net cash provided by (used in) operating activities (net cash flow)

 

113

 

43

Net cash provided by (used in) investing activities

 

(6)

 

(4)

Net cash provided by (used in) financing activities

 

(107)

 

(39)

Change in cash and cash equivalents