Merck 2014 Annual Report Download - page 183

178 CONSOLIDATED FINANCIAL STATEMENTS → Notes to the Group accounts
The development of goodwill during the period from first-time
recognition and December 31, 2014 was as follows:
€ million
Development
of goodwill
Goodwill on May 2, 2014 818.4
Exchange rate effects 111.6
Goodwill on December 31, 2014 930.0
Within the scope of the acquisition, no contingent consideration
was agreed upon which the Group would possibly have to pay in
the future. The selling shareholders did not contractually indemnify
the Group for the outcome of a contingency or uncertainty related
to the acquired assets or liabilities. Costs of €7.7 million directly
related to the acquisition of the company were recorded under
other operating expenses in 2014.
The most significant impact of the purchase price allocation
resulted from the remeasurement of intangible assets, property,
plant and equipment, as well as work in progress and finished
goods included in inventories at fair value. Since work in progress
and finished goods were sold within 2014, this led to additional
cost of sales offset by the sales achieved. As a result, the sale
of these inventories did not generate any additional income. The
intangible assets identified during the purchase price allocation
and recognized on the date of first-time consolidation were to the
largest extent attributable to technology-related intangible assets
and brand rights. The multi-period excess earnings method was
used for the valuation of technology-related intangible assets. The
relief from royalty method was used for the valuation of the brand
rights.
No contingent liabilities were identified in the course of the
purchase price allocation. The gross amounts of the acquired
receivables on the acquisition date were €130.3 million. The best
possible estimate of the irrecoverable receivables amounted to less
than €0.1 million.
Planned acquisition of the Sigma-Aldrich Corporation
MerckKGaA, Darmstadt, Germany, and the Sigma-Aldrich Corpo-
ration, a life science and high-tech enterprise headquartered in St.
Louis, (USA) (Sigma- Aldrich), announced on September 22, 2014
that they had entered into a merger agreement under which the
Group will acquire Sigma-Aldrich for a total purchase price of
approximately US$17.0 billion or approximately €13.1 billion
(based on the exchange rate on September 22, 2014). Sigma-
Aldrich shareholders approved the acquisition at an extraordinary
shareholders’ meeting on December5, 2014.
The Group received antitrust clearance of the planned acquisition
from the U.S. Federal Trade Commission ( FTC ) on December23, 2014.
U.S. antitrust clearance satisfies a condition to closing the trans-
action, which remains subject to certain other closing conditions,
including regulatory approval in other jurisdictions. MerckKGaA,
Darmstadt, Germany, expects the transaction to close by mid-2015.
The purchase price will be financed through a combination of
cash on the Group’s balance sheet, bank loans and bonds. The vast
majority of the currency risk stemming from the payment of the
purchase price in U.S. dollars has been hedged using standard
derivatives (forward exchange transactions and currency options)
in line with the requirements for cash flow hedge accounting.
Divestment of the Discovery and Development Solutions
business field
Effective March 31, 2014, the Discovery and Development Solu-
tions business field of the Life Science division was sold to Eurof-
ins Scientific S.A., Luxembourg. The assets sold were reported as
a disposal group in the consolidated financial statements as of
December 31, 2013 and included property, plant and equipment,
inventories, and goodwill allocated to the business field. The sell-
ing price was €22.6 million. In accordance with the contractual
agreement, €20.9 million of this amount was received as of the
end of the reporting period.