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US green light for Elanco’s takeover of Bayer Animal Health

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Elanco, the world’s second largest animal heath company, has received the last of the global regulatory approvals needed to secure its $7.6 billion acquisition of Bayer’s Animal Health business unit. The deal was first announced in August 2019.

 

Elanco and Bayer are the fourth and fifth largest world animal health businesses ranked on 2019 revenues with $3.07 billion and $1.76bn respectively. Together, they will be in second place ahead of Merck Animal Health ($4.39bn) and Boehringer Ingelheim ($4.52bn) but behind global market leader Zoetis ($6.6bn).

 

Bayer is divesting the veterinary medicines business as part of the process of freeing funds to meet the $10 billion plus needed to settle glyphosate litigation, a legacy of its acquisition of Monsanto, that was announced last month.

 

Elanco, formerly the animal health division of Eli Lilly $ Co, was spun out of the parent company in March 2019.

 

Elanco said the US Federal Trade Commission (FTC) has given its approval for the acquisition of Bayer Animal Health. The FTC decision is the final antitrust clearance needed to complete the transaction – clearance had already been obtained from competition authorities in the EU, Australia, Brazil, Canada, China, Colombia, New Zealand, South Africa, Turkey, the Ukraine and Vietnam.

 

Assets divested

 

The deal is on track to closing at the beginning of August. Elanco will fund the purchase through equity issuance and pricing of its Term Loan B. Elanco has divested assets worth $120 – $140 million in revenue terms to secure regulatory approvals.

 

The two businesses are largely complementary – Elanco says it will combine Elanco’s long-standing focus on the veterinarian with Bayer’s direct-to-consumer expertise, which has proven even more important in light of the COVID-19 pandemic.

 

In addition, the move will better balance Elanco’s international portfolio; balance between its farm animal and pet health businesses; and grow the omnichannel approach - substantially diversifying its pet health business into the retail and e-commerce channels.

 

“This approval marks the near-final step in fulfilling our vision of bringing together two dedicated animal health companies focused on delivering innovation and an expanded portfolio of solutions to farmers, veterinarians and pet owners around the globe,” said Jeff Simmons, president and chief executive of Elanco. “As we approach closing and look toward putting our integration plans into action, I want to thank everyone who has worked so tirelessly on this transaction, especially during these challenging times.”

 

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