Sector News

Elanco to become No.2 in animal health with $7.6 billion Bayer deal

August 20, 2019
Life sciences

Elanco Animal Health agreed to buy Bayer’s veterinary drugs unit on Tuesday in a cash and stock deal valued at $7.6 billion, creating the second largest animal health business and expanding Elanco’s reach online.

The deal is the latest in the fast-growing animal health market, which has recently seen Elanco floated by Eli Lilly and Co and rival U.S. drugmaker Pfizer also spinning off its veterinary medicine business.

It also adds to the list of assets sold by Bayer, as the German company looks to slash debt after its $63 billion takeover of seed maker Monsanto last year.

Elanco said it expected the transaction to close by the middle of 2020.

The two companies said Bayer would receive $5.3 billion in cash and $2.3 billion worth of Elanco stock based on a price of $33.60 per share, the 30-day average price as of Aug. 6.

Elanco said the stock amounted to 68 million shares, or a stake of about 18.2% based on Refinitiv data, but the number of shares could rise or fall by as much as 7.5%, depending on Elanco’s share price performance on the closing date.

The price tag implies a multiple of 18.8 times adjusted core earnings, Bayer said, adding it would sell the equity stake over time.

Reuters reported last month that Bayer had approached Elanco to discuss a possible combination that would be number two after industry leader Zoetis and ahead of unlisted Boehringer Ingelheim – which bought animal health assets from Sanofi – and drugmaker Merck & Co.

Market researchers expect the $44 billion animal health sector to grow 5%-6% per year, driven by an increase in livestock farming and, more importantly, by more people wanting to own pets and spending more money on their wellbeing.

Bayer is the world’s largest maker of flea and tick control products for cats and dogs, with Elanco praising its “top presence on Amazon” with “industry-leading e-commerce/retail capabilities.”

“The move combines our long-standing focus on the veterinarian, while meeting pet owners’ changing expectation of pet care and access to products,” said Elanco CEO Jeffrey Simmons.

Bayer has recently sold its 60% stake in a chemical park operator as well as consumer health brands Dr. Scholl’s and Coppertone.

By Ludwig Burger

Source: Reuters

comments closed

Related News

June 22, 2024

Ferring launches online assessment tool, educational platform around male fertility

Life sciences

Because infertility is often branded largely as a women’s issue, many men may be unaware of their own possible role in the matter and may not undergo testing in a timely manner—even though research has shown that men “substantially” contribute to about half of all cases of infertility.

June 22, 2024

Johnson & Johnson blueprints €125M plant upgrade as part of 5-year Italy investment

Life sciences

After plugging nearly 50 million euros into its Italy R&D in the first half of the decade, Johnson & Johnson Innovative Medicine is significantly upping its commitment to the country. Over the next five years, J&J Innovative Medicine, which recently rebranded from Janssen, will plug a projected 580 million euros ($621.7 million) into its Italian business, the company said in a press release.

June 22, 2024

India’s Lupin announces CEO pick for new subsidiary as it moves into the CDMO arena

Life sciences

From vitamin maker to pharmaceutical specialist and now contract manufacturer, India’s Lupin is embarking on a new phase of its corporate journey. Lupin on Monday unveiled its new subsidiary, Lupin Manufacturing Solutions, which is poised to work on the development, production and sale of active pharmaceutical ingredients.

How can we help you?

We're easy to reach