Elanco Closes $6.89-Bn Acquisition of Bayer Animal Health
Elanco Animal Health, the former animal-health business of Eli Lilly and Company and now a stand-alone company, has closed its $6.89-billion acquisition of Bayer Animal Health.
The companies signed an agreement for the acquisition in August 2019. The transaction was completed after fulfillment of the closing conditions, including the receipt of regulatory approvals. Bayer’s former Animal Health business has about 4,400 employees and achieved sales of EUR 1.57 billion ($1.9 billion) in 2019.
Upon closing of the transaction, Bayer received $5.17 billion in cash after deduction of customary purchase price adjustments, along with 72.9 million shares of Elanco Animal Health common stock, corresponding to 15.5% of Elanaco’s outstanding stock. Bayer says it maintains its intention to divest its stake in Elanco in due course. The shares are subject to certain retention periods until mid-2021. Moreover, Elanco has completed the required antitrust divestures that had been previously announced; these divested products had 2019 revenue in the range of $120 million to $140 million.
The divestment of the Animal Health business is the largest transaction in a series of divestments Bayer initiated in November 2018 following its $63-billion acquisition of Monsanto, an agrochemical and seed chemical, in June 2018. Since then, Bayer has completed the sale of the Coppertone and Dr. Scholl’s consumer health brands and its 60% stake in German site services provider Currenta.
Following the acquisition, Elanco’s R&D pipeline now has five expected launch equivalents from Bayer to bring Elanco’s anticipated total to 25 by 2024, with five of those expected to launch by the end of 2021. The transaction also adds new R&D capabilities, including dosing and delivery technology platforms, and provides access rights to Bayer’s Crop Science R&D pipeline and de-prioritized clinical pharma assets. The combination raises the share of Elanco’s pet business to approximately 50% of revenues and nearly triples the company’s international pet health business. In its farm animal business, the transaction adds a number of anchor cattle brands, enhances the company’s global bio-protection portfolio, and expands the company’s aqua presence into warm-water fish.
While the timing of achieving cost-saving goals from acquisition have been impacted by the COVID-19 pandemic, Elanaco says it still expects to deliver $275 million to $300 million in synergies by 2025. Under the agreement with Elanco, all Bayer Animal Health employees will have at least one year of employment protection.