The deal is expected to make Elanco the second largest animal health business in the US
Image: Bayer to sell its animal health business to Elanco. Photo: Courtesy of Bayer AG.
German pharmaceutical giant Bayer has signed a definitive agreement with Elancoto to sell its Animal Health business unit for $7.6bn (£6.26bn).
The deal is part of Bayer’s measures that began last November. The exit from animal health business is expected to support the company to focus on life sciences.
Valued at $7.6bn, the deal includes $5.3bn(£4.36bn) in cash and $2.3bn (£1.9bn) in Elanco stock, as of 6 August, this year. The deal is expected to be closed in the middle of next year, subject to customary closing conditions, including antitrust clearance. Bayer also intends to sell its stake in Elanco over time.
Bayer board of management chairman Werner Baumann said: “This transaction enhances our focus as a global leader in life sciences. The exit of the Animal Health business marks the largest transaction in the series of portfolio measures initiated by Bayer in November 2018.
“The company had previously announced the divestiture of its Consumer Health brands Coppertone and Dr. Scholl’s along with the sale of its 60-percent stake in German site services provider Currenta. We are therefore delivering ahead of schedule on one of the key priorities for driving value creation that we communicated at our Capital Markets Day in December 2018.”
Bayer’s Animal Health business’ sales were £1.48bn last year
Claimed to be a business with $1.8bn (£1.48bn) in sales in fiscal 2018, Bayer’s Animal Health business, it develops and sells new products and solutions that treat and prevent diseases in companion and farm animals.
Its Advantage family of flea, tick and worm control products is claimed to be a highly successful products for several years. Additionally, its Seresto collar is one of the fastest-growing products in this area.
As per Bayer, its animal health business and Elanco complement each other and is claimed to create the number two company, with top three positions across a broad range of species and geographies.
Bayer’s unit could also enhance Elanco’s portfolio as a leading brand, bolstering its innovation and R&D pipeline capabilities.
As per Elanco, the transaction can double its companion animal business, advancing its intentional portfolio mix transformation and will create a balance between its food animal and companion animal segments.
The combined organisation is expected to deliver mid-single digit revenue growth, while accelerating achievement of adjusted gross margin goals.
Elanco president and CEO Jeffrey N. Simmons said: “In our first four quarters as an independent company, we have validated the significant value creation potential from a dedicated focus on animal health and a targeted strategy.
“Joining Elanco and Bayer Animal Health strengthens and accelerates our IPP strategy, transforms our portfolio with the addition of well-known pet brands, brings an increased presence in key emerging markets, expands innovation, and accelerates our margin expansion journey. The move combines our long-standing focus on the veterinarian while meeting pet owners’ changing expectation of pet care and access to products.”