Medtronic 2015 Annual Report Download - page 91

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Medtronic plc
Notes to Consolidated Financial Statements (Continued)
Fair Value of Consideration Transferred
Total consideration was approximately $50 billion, consisting of $16 billion cash and $34 billion of non-cash consideration.
Total consideration is comprised of the equity value of the shares that were outstanding as of January 23, 2015 and the portion
of Covidien’s share awards and share options earned as of January 23, 2015 ($559 million). Share awards and share options not
earned ($496 million) as of January 23, 2015 will be expensed over the remaining future vesting period, including $189 million
and $70 million recognized in acquisition-related items and restructuring charges, net, respectively, for the fiscal year ended
April 24, 2015.
The following table summarizes the total fair value of consideration transferred:
(in millions, except $ per share data)
Cash consideration paid to Covidien shareholders ($35.19 per share) $ 15,994
Cash consideration paid for vested Covidien share awards ($35.19 per share) 33
Total cash consideration $ 16,027
Covidien shares outstanding as of January 23, 2015 455
Exchange ratio per share 0.956
Total Medtronic shares issued to Covidien shareholders(a) 435
Medtronic per share value as of January 23, 2015 $ 76.95
Fair value of Medtronic shares issued to Covidien shareholders $ 33,435
Fair value of shares issued to Covidien share award holders(a) 70
Fair value of share options and awards issued to Covidien share option and award holders 456
Total fair value of consideration transferred $ 49,988
(a) 1 million ordinary shares were issued, net, to Covidien share award holders.
Fair Value of Assets Acquired and Liabilities Assumed
The Company accounted for the acquisition of Covidien as a business combination using the acquisition method of accounting.
The assets acquired and liabilities assumed were recorded at their respective fair values as of the Acquisition Date. Based upon
a preliminary acquisition valuation, the Company acquired $18.3 billion of customer-related intangible assets, $7.1 billion of
technology-based intangible assets, $0.5 billion of tradenames, with weighted average estimated useful lives of 18, 16, and 3
years, respectively, $0.4 billion of IPR&D, and $29.6 billion of goodwill.
As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments will be
recorded during the measurement period in fiscal year 2016. Fair value estimates are based on a complex series of judgments
about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the
estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially
impact the Company’s results of operations. The finalization of the purchase accounting assessment will result in a change in
the valuation of assets acquired and liabilities assumed and may have a material impact on the Company’s results of operations
and financial position.
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