Merck & Co. reached a deal to acquire the French digital animal identification solutions company Antelliq Group for $2.37 billion from funds advised by BC Partners. The transaction is all cash. Merck said it would assume $1.3 billion in Antelliq’s debt, which it intends to repay shortly after closing.
Antelliq Group, which makes digital identification products for animals, had $406.5 million in sales for the year ended September 30. Merck’s animal health segment had sales of $3.88 billion in 2017.
Merck shares have risen 40% this year but fell 1% on the announcement.
The deal comes as investors see value in spinning off the animal health businesses like Merck’s rivals. Pfizer’s Zoetis raised $2.2 billion in an initial public offering in 2013. Elanco, the former animal health business at Lilly, raised $1.51 billion through an IPO in September.
In October, Merck’s CEO Kenneth Frazier said his company was a good owner of the animal health unit.
“Merck Animal Health is a leader in the animal health business and has delivered consistent above-market growth driven by a broad portfolio of innovative pharmaceuticals, vaccines, and other value-added technologies and services,” Frazier said in a statement.
“This acquisition is well aligned with our strategy to generate long-term growth and sustainable value for our customers and shareholders,” said Frazier.
Merck said the deal was expected to close in the second quarter of 2019. After closing, Antelliq will be a wholly owned and separately operated subsidiary within Merck’s animal health division.
“Antelliq is a unique business which played a pivotal role in driving forward the convergence of the animal intelligence and animal health industries globally,” Antelliq Chairman Jean-Baptiste Wautier said, adding that Merck was an ideal partner for Antelliq to support the next stage of its growth.