Bayer to sell animal health business for $7.6B

Bayer AG said it has agreed to sell its animal health business to Elanco Animal Health for $7.6 billion.

The German-based chemicals and pharmaceutical group, which has a major presence in Whippany, said on Tuesday the deal will turn Greenfield, Indiana-based Elanco into the second largest animal health company.

Under the acquisition, Elanco will now manufacture medicines for pets and livestock and expand its research and development pipeline.

“This transaction enhances our focus as a global leader in life sciences,” Werner Baumann, chairman of the board of management of Bayer AG, said.

The deal, which is the largest transaction in a series of portfolio measures initiated by Bayer in November 2018, is expected to close by mid-2020. The company previously announced its divestiture of its Coppertone and Dr. Sholl’s product lines in its Consumer Health business, as well the sale of a 60% interest it had in Currenta, a German-based site services provider.

“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,” Baumann said.

Bayer said it intends to exit its stake in Elanco over time.

“I have tremendous respect for the Bayer Animal Health team and their shared passion for improving the health and well-being of animals,” Jeffrey N. Simmons, CEO and president, Elanco, said. “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.”

The two companies said Bayer would receive $5.3 billion in cash and $2.3 billion in Elanco stock. Bayer’s Animal Health segment, which develops and markets products and solutions to prevent and treat diseases in companion and farm animals, had sales of $1.8 billion in fiscal 2018.

“We would like to thank all our Animal Health employees for the commitment they have shown over the years and for the success this has brought to Bayer and to our Animal Health business. We were also able to safeguard the interests of our employees,” Baumann said.

Bank of America Merrill Lynch and Credit Suisse acted as financial advisors and Sullivan & Cromwell, PwC Legal and Linklaters acted as legal advisorst to Bayer.