PEL didn’t publicly disclose the acquisition amount so they would not share in annual report. Here is the link confirming that acquisition amount was not disclosed. PEL bought intellectual property (patents + trademarks + know-how) worldwide development, marketing and distribution rights of lead compound florbetaben as well as other clinical and pre-clinical assets of Bayer. Given all these advantages, I don’t see a reason why Bayer would sell it’s imaging business to PEL at or below book value. There are good odds PEL paid premium and recorded goodwill for FY2013 for this purchase. Also I see goodwill going up from 587cr in FY12 to 4004cr in FY13 which may include goodwill for this specific purchase.
My friend @kanwalpreet18, in consolidation method all revenue, expenses, assets, and liabilities of subsidiary are merged/consolidated. Portion of profit/loss and equity that is not owned by the parent is recorded as minority interest in both P&L and B/S equity. With all due respect - your comment about merging retained earnings of Piramal Imaging in PEL books does not make sense.
When you say “negative retained earnings of PI will have to be removed from consolidated level” - in other words I feel what you are saying is that all losses incurred by PI so far have to be removed and instead replaced by a single line-item with “grand total loss / write-off”. I don’t think this is prescribed method according to accounting standards and it doesn’t make any sense to undo all small losses and replace with a single big loss. Each annual losses of PI have already been consolidated (reducing parent’s equity every year) and it cannot be undone when you sell your loss making subsidiary. Prior multiple losses just cannot be removed in this case and replaced with single big loss.
Below is what management stated about write-off in their presentation:
Management is writing-off Imaging business assets, I feel its nothing but goodwill which remained untouched all these years on PEL’s books while Imaging business made losses and increased it’s negative net-worth. When I try to connect all the dots, write-off of Goodwill sounds logical to me.
With all due respect - I’d prefer to not waste the precious VP real-estate by further beating this dead horse. But happy to discuss further on this “write-off” topic offline. Please feel free to IM me. Cheers!