Proctor and Gamble 2016 Annual Report Download - page 74

60 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Coty’s offer for the Beauty Brands, which was accepted by the
Company, was $12.5 billion. The final value of the transaction
will be determined at closing. Based on Coty’s stock price and
outstanding shares and equity grants as of June 30, 2016, the
value of the transaction was approximately $13.1 billion. The
value is comprised of approximately 411 million shares, or
54% of the diluted equity of the newly combined company,
valued at approximately $10.7 billion and the assumption of
debt of $2.4 billion by the entity holding the Beauty Brands
(excluding Dolce & Gabbana and Christina Aguilera)
immediately prior to close of the transaction. The assumed
debt is expected to vary between $3.9 billion and $1.9 billion,
depending on a $22.06 to $27.06 per share collar of Coty’s
stock based on the trading price prior to the close of the
transaction, but will be subject to other contractual valuation
adjustments.
In February 2016, the Company completed the divestiture of
its Batteries business to Berkshire Hathaway (BH) via a split
transaction, in which the Company exchanged the Duracell
Company, which the Company had infused with additional
cash, to repurchase all 52.5 million shares of P&G stock owned
by BH. During the fiscal year ended June 30, 2016, the
Company recorded non-cash, before-tax goodwill and
indefinite-lived asset impairment charges of $402 ($350 after
tax), to reduce the Batteries carrying value to the total estimated
proceeds based on the value of BH’s shares in P&G stock at
the time of the impairment charges (see Note 4). The Company
recorded an after-tax gain on the final transaction of $422 to
reflect a subsequent increase in the final value of the BH’s
shares in P&G stock. The total value of the transaction was
$4.2 billion representing the value of the Duracell business and
the cash infusion. The cash infusion of $1.7 billion was
reflected as a purchase of treasury stock.
On July 31, 2014, the Company completed the divestiture of
its Pet Care operations in North America, Latin America, and
other selected countries to Mars, Incorporated (Mars) for $2.9
billion in an all-cash transaction. Under the terms of the
agreement, Mars acquired our branded pet care products, our
manufacturing sites in the United States and the majority of
the employees working in the Pet Care business. The
agreement included an option for Mars to acquire the Pet Care
business in several additional countries, which was also
completed in fiscal 2015. The European Union countries were
not included in the agreement with Mars.
In December 2014, the Company completed the divestiture of
its Pet Care operations in Western Europe to Spectrum Brands
in an all-cash transaction. Under the terms of the agreement,
Spectrum Brands acquired our branded pet care products, our
manufacturing site in the Netherlands and the majority of the
employees working in the Western Europe Pet Care business.
The one-time after-tax impact of these transactions is not
material.
In accordance with applicable accounting guidance for the
disposal of long-lived assets, the results of the Beauty Brands,
Batteries and Pet Care businesses are presented as discontinued
operations and, as such, have been excluded from both
continuing operations and segment results for all periods
presented. Additionally, the Beauty Brands, Batteries and Pet
Care businesses' balance sheet positions are presented as assets
and liabilities held for sale in the Consolidated Balance Sheets.
The Beauty Brands were historically part of the Company's
Beauty reportable segment. The Batteries business was
historically part of the Company's Fabric & Home Care
reportable segment. The Pet Care business was historically part
of the Company's Health Care reportable segment.
On July 1, 2015, the Company adopted ASU 2014-08, which included new reporting and disclosure requirements for discontinued
operations. The new requirements are effective for discontinued operations occurring on or after the adoption date, which includes
the Beauty Brands divestiture. All other discontinued operations prior to July 1, 2015 are reported based on the previous disclosure
requirements for discontinued operations, including the Batteries and Pet Care divestitures.
The following table summarizes Net earnings/(loss) from discontinued operations and reconciles to the Consolidated Statements
of Earnings:
Years ended June 30 2016 2015 2014
Beauty Brands $ 336 $ 643 $ 660
Batteries 241 (1,835) 389
Pet Care —49 78
Net earnings/(loss) from discontinued operations $ 577 $(1,143) $ 1,127