Elanco to Acquire Bayer’s Animal Health Business

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The proposed deal would create the second-largest animal health company.

What had been hinted at for weeks finally came to fruition in late August – Elanco Animal Health Incorporated announced it has entered into an agreement with Bayer AG to acquire its animal health business.

The transaction is valued at $7.6 billion and would create the second-largest animal health company in the industry. The transaction, subject to regulatory approval and other customary closing conditions, is expected to close by the middle of 2020.


“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,” said Jeffrey N. Simmons, president and chief executive officer of Elanco. “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 expectations of pet care and access to products.”

Bayer AG’s chief executive officer, Werner Baumann, added: “Our Animal Health business is among the pioneers of this sector, having built up an attractive portfolio and secured well-established market positions in the companion and farm animal segments. And now, the combination with Elanco will give rise to a leading competitor in the animal health industry, benefiting customers, employees and shareholders alike.”

‘Elevating’ Companion Animal business

Elanco said the deal would double its Companion Animal business, elevating Companion Animal to nearly half of the overall business. The company said the combination creates access to new segments of the parasiticides market with topical treatments and collars, and propels Elanco into expanding pet e-commerce and retail spaces.

In the Food Animal business, the acquisition will add a number of anchor cattle brands, create a bio-protection portfolio and expand Elanco’s aqua presence into warm water fish. “The enhanced global presence will allow Elanco to better serve veterinarians, farmers and pet owners,” the company said in a release.

Elanco said the deal also augments its R&D pipeline, with eight significant new development projects and 30+ lifecycle products, while providing certain access rights to Bayer’s CropScience R&D pipeline and de-prioritized clinical pharma assets.

“This combination will join two complementary animal health-focused entities previously under the human pharma umbrella into a dedicated company focused on delivering for farmers, veterinarians and pet owners. It creates increased speed, attention and investment to bring customers greater access and options at a variety of price points to make a difference in the lives of animals,” Simmons said. “We look forward to adding Bayer Animal Health’s employees’ breadth of expertise. Ultimately, we believe these increased capabilities and knowledge will allow us to better support the veterinarian, creating a bridge between the pet owner and the veterinarian where relationships don’t exist today.”

By the numbers

Elanco

Bayer

2018 Revenue

$3.1b

$ 1.7bn1

2018 Gross Margin

50%

64%

Headquarters

Greenfield, Indiana

Monheim, Germany

Countries with Presence

~ 50

~ 60

Key Brands

125

100+

Years in Industry

65

100+

R&D Sites

9

4

Manufacturing Sites

12

9

Number of Employees

~ 5,800

~ 4,250

1 Represents revenue converted to USD using spot EUR/USD exchange rate as of 16-Aug-2019.

Source: Elanco presentation

Photo Credit:  istockphoto.com/beavera

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