Bayer is selling its animal health business to Elanco Animal Health for $7.6 billion. The deal consists of $5.3 billion in cash, subject to customary purchase price adjustments, and $2.3 billion U.S. dollars in Elanco stock based on the unaffected 30-day volume weighted average price as of Aug. 6, 2019. The sale is expected to be concluded in mid-2020 subject to the satisfaction of customary closing conditions, including antitrust clearance. Bayer intends to exit its stake in Elanco over time.
“This transaction enhances our focus as a global leader in life sciences,” said Werner Baumann, Chairman of the Board of Management of Bayer AG. 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% 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.”
The deal creates the number two animal health company, with top three positions across a broad range of species and geographies. It also enhances Elanco’s portfolio of leading global brands and bolsters its innovation capabilities and R&D pipeline.
“I have tremendous respect for the Bayer Animal Health team and their shared passion for improving the health and well-being of animals,” said Jeffrey N. Simmons, president and chief executive officer of Elanco. “Combining Elanco’s strong relationship with veterinarians and Bayer’s leadership in retail and e-commerce will ultimately benefit all our customers. We look forward to joining our complementary portfolios and capabilities to build a fully focused animal health company, providing a sustained flow of innovation for farmers, veterinarians and pet owners.”
Bayer’s Animal Health business had sales of $1.8 billion in fiscal 2018.
Under the agreement with Elanco, all Bayer Animal Health employees will have at least one year of employment protection against unilateral termination with similar and no less favorable benefits in the aggregate.
Bank of America Merrill Lynch and Credit Suisse acted as financial advisors to Bayer.