Elanco Animal Health reached an agreement to buy Bayer’s animal health business in a cash and stock deal valued at $7.6 billion.

Elanco said the deal, which it will finance through cash and equity, will double the size of its companion animal business.

“The move combines our long-standing focus on the veterinarian, while meeting pet owners’ changing expectation of pet care and access to products,” Elanco chief executive officer Jeffrey Simmons said in a statement.

The companies said, under the terms of the agreement, Bayer would get $5.3 billion in cash and $2.3 billion worth of Elanco stock based on a price of $33.60 per share, the 30-day average price as of August 6. Elanco said the stock value resulted in a stake of about 18.2%, but that stake could change depending on Elanco’s share price performance on the closing date.

Bayer said the deal implied a multiple of 18.8 times adjusted core earnings.

Bayer recently sold a majority stake in a chemical park operator and has sold off consumer health brands Dr. Scholl’s and Coppertone as it looks to reduce debt following its $63 billion acquisition of Monsanto. The company is also bracing for a possible settlement of lawsuits stemming from its cancer-causing weed killer Roundup, which analysts project at between $5 billion and $10 billion.

Citi said Bayer sold near the top of the price range its analysts had projected and they expected Bayer to buy back $3.33 billion worth of its stock to offset lower earnings per share.

The animal health sector has been projected to grow between 5% and 6% per year as pet-ownership increases and people spend more on their animals’ health. The market is currently pegged at $44 billion per year.

Goldman Sachs acted as financial advisor to Elanco. A fairness opinion was provided by Duff & Phelps. The transaction is expected to close in mid-2020.

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