Scale and capabilities of the combined company position Elanco for the long term as a leader in the attractive, durable animal health industry. Transaction valued at close at $6.89 billion, funded by $5.17 billion in cash and 72.9 million shares to Bayer.
Elanco Animal Health Incorporated (NYSE: ELAN) the 3rd of August announced it has closed the acquisition of Bayer Animal Health. The transaction, valued at $6.89 billion, expands Elanco’s scale and capabilities, positioning the company for the long term as a leader in the attractive, durable animal health industry.
“Nearly two years into our journey as an independent company, we have made significant progress in creating a purpose-driven, independent global company dedicated to animal health – all while weathering the century’s most significant animal and human health pandemics: African Swine Fever and COVID-19,” said Jeff Simmons, president and CEO of Elanco. “Delivering on the timely close of the acquisition and bringing momentum into Day 1 in this challenging environment underscores the deep capability and disciplined execution from both companies.”
“This milestone is another key step in Elanco’s journey. But, ultimately, today is about improving the lives of animals, people and improving the health of the planet. Pets and protein have never been more important,” Simmons said. “Food supply disruptions and increasing unemployment are driving food security challenges around the world. At the same time, research shows increased time at home has changed the long-term relationship between pets and their owners, as pets increasingly provide valuable emotional support. We know making life better for animals, simply makes life better.”
Meanwhile, the pandemic has accelerated key trends transforming the industry, particularly pet owners’ desire to access veterinary care and animal health products in a variety of forms, from curbside care and telemedicine to online purchases shipped direct to the doorstep. The combination of Elanco and Bayer Animal Health joins Elanco’s existing strong relationship with the veterinarian with Bayer Animal Health’s focus in retail and online in order to create an omni-channel leader best positioned to serve veterinarians and pet owners where they want to shop.
This acquisition strengthens Elanco’s Innovation, Portfolio, Productivity (IPP) strategy, which the company has been executing on since before its IPO in 2018. Both companies come to closing with a disciplined focus on the strategy and diligent execution to drive momentum.
- Innovation: Elanco’s robust R&D pipeline is now bolstered with five expected launch equivalents from Bayer – bringing 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 innovative dosing and delivery technology platforms, and provides access rights to Bayer’s Crop Science R&D pipeline and de-prioritized clinical pharma assets.
- Portfolio: The combination expands Elanco’s portfolio to provide farmers, pet owners, and veterinarians more comprehensive animal health solutions. By combining Elanco’s longstanding focus on the veterinarian with Bayer’s direct-to-consumer experience, the transaction opens new opportunities for growth and expands Elanco’s omni-channel presence, enabling the company to meet customers where and how they want to shop.
Pet Health: The combination elevates Elanco’s pet business to approximately 50 percent of revenues and nearly triples the company’s international pet health business. This expanded portfolio of care provides for pets at all ages and stages, from disease prevention and wellness for the youngest puppies to helping pets remain an active, central part of the family in their later years. The transaction also broadens Elanco’s pet parasiticide portfolio with topical treatments and collars, making the blockbuster Seresto collar Elanco’s top product globally.
Farm Animals: The combined company brings together complementary farm animal portfolios that position Elanco to serve an even broader spectrum of the industry and better leverage data, and services for customers. 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.
- Productivity: Elanco plans to leverage its extensive integration experience – and ownership mindset – to efficiently and quickly integrate the new business. The combined company is expected to generate significant operating cash flow as a result of the durable industry and resilient portfolios. While the timing of achieving goals from the deal announcement have been impacted by the COVID-19 pandemic, the company still expects to deliver $275 – $300 million in synergies by 2025.
“Most importantly, today is about the farmers, veterinarians, and pet owners we serve. If COVID-19 has made anything clear – it’s that the world has never needed animals and the work farmers and veterinarians do more,” Simmons said. “Together, we are better positioned to advocate for our customers, to deliver solutions to their greatest unmet needs, so they can keep healthy, sustainably sourced meat, milk, fish and eggs in the center of the dinner table and healthy, active pets in the center of families. Together, we have the potential to improve animal health and the lives of billions.”
