Elanco Animal Health is a major economic driver in Indiana
U.S.-based company Elanco Animal Health has entered into a definitive agreement to acquire Bayer’s Animal Health business, Bayer announced on Aug. 20. The transaction is valued at 7.6 billion U.S. dollars consisting of 5.3 billion U.S. dollars in cash, subject to customary purchase price adjustments, and 2.3 billion U.S. dollars in Elanco stock based on the unaffected 30-day volume weighted average price as of August 6, 2019. The value of the equity consideration is fixed within a 7.5 percent collar. The transaction value represents an implied multiple of 18.8x based on the 12 months EBITDA before special items of Bayer Animal Health as of June 30, 2019. The divestment is expected to be concluded in mid-2020 subject to the satisfaction of customary closing conditions, including antitrust clearance. Bayer intends to exit its stake in Elanco over time.
The combination is highly complementary and creates the number two animal health company, with top three positions across a broad range of species and geographies. It also enhances Elanco’s portfolio of leading global brands and bolsters its innovation capabilities and R&D pipeline.
“I have tremendous respect for the Bayer Animal Health team and their shared passion for improving the health and well-being of animals,” said Jeffrey N. Simmons, president and chief executive officer of Elanco. “Combining Elanco’s strong relationship with veterinarians and Bayer’s leadership in retail and e-commerce will ultimately benefit all our customers. We look forward to joining our complementary portfolios and capabilities to build a fully focused animal health company, providing a sustained flow of innovation for farmers, veterinarians and pet owners.”
Bayer’s Animal Health business is a global leader in the segment with sales of 1.8 billion U.S. dollars in fiscal 2018. It develops and markets innovative products and solutions to prevent and treat diseases in companion and farm animals. The Advantage™ family of flea, tick and worm control products, for instance, has been among the most successful products on the market for years. In addition, the innovative Seresto™ collar is one of the fastest-growing products in this area.
Indiana State Department of Agriculture Director Bruce Kettler issued the following statement on the agreement between Elanco Animal Health and Bayer:
“This is an exciting new development for Elanco Animal Health, which is a major economic driver in Indiana. For decades, Elanco has been pioneering advances to improve the health and well-being of animals and is now on its way to becoming the second-largest animal health company in the world. Entering into this agreement bolsters the important, global role they play in agriculture.”