Merck 2014 Annual Report Download - page 181

176 CONSOLIDATED FINANCIAL STATEMENTS → Notes to the Group accounts
By June 27, 2014, the Group’s shareholding in AZ had increased to
99.8 % and was then able to initiate a squeeze-out, which was
completed on July 2, 2014 with the acquisition of the remaining
shareholding of 0.2 %. The acquisition of non-controlling interests
after May 2, 2014 was recognized in equity as a transaction with-
out a change of control. Above and beyond the purchase price to
obtain control, the following purchase price was paid in order
to increase the shareholding:
Acquired
shareholding (in %) €million
Purchase price for the obtainment of control 81.3 1,523.4
Purchase price / Payments for the acquisition of further shares after obtainment of control 18.7 351.3
Total purchase price before the deduction of acquired cash and cash equivalents 100.0 1,874.7
Business activities as well as sales and earnings contribution
of AZ
AZ is a leading global producer of specialty chemical materials that
generated sales of US$730.3 million (2012: US$793.9 million)
and
profit after tax of US$57.3 million (2012: US$ 83.3 million) in
2013. Around 67.5 % of sales were attributable to the IC Materials
division, which supplies process chemicals used to manufacture
integrated circuits in the highly differentiated premium segment.
The Optronics division accounted for approximately 32.5 % of
sales in 2013. This division’s portfolio includes light-sensitive
processing materials, or photoresists, for the manufacture of flat
panel displays, as well as silicon-chemistry-based products for
optoelectronics. As of the end of 2013, AZ had a total of 1,131em-
ployees.
After May 2, 2014, the Group began to integrate AZ into the
Performance Materials division. The aim of the acquisition was to
further strengthen the Group’s materials and specialty chemicals
business by joining forces with one of the leading suppliers of
high-tech materials for the electronics industry.
The impact of the consolidation of AZ on sales as well as net
income after taxes between May 2, 2014 and December 31, 2014
amounted to € 374.7 million and € – 52.5 million, respectively.
This result takes into account higher cost of sales owing to the
step-up of the acquired inventories to fair values.
Assuming the first-time consolidation of AZ had already taken
place as of January 1, 2014, sales of the Group for the period from
January 1 to December 31, 2014 would have amounted to €11,471.3
million (compared with reported sales of €11,291.5 million) and net
income after taxes would have been €1,155.5 million (compared
with reported net income of €1,164.8million). The determination
of these figures assumed that the adjustments of the book values as
a result of the purchase price allocation would have been identical.
Purchase price allocation
The acquired assets and liabilities were recognized at the follow-
ing fair values on the date of the first-time consolidation. The
possibility of measuring non-controlling interests at fair values on
the acquisition date (full goodwill method) was not applied. The
purchase price allocation was completed as of the reporting date.