August 21, 2019
Elanco confirms agreement to buy Bayer's animal health unit for US$7.6 billion
In an August 20 statement, Elanco has agreed to buy Bayer's animal health unit for US$7.6bn, as Bayer sells off assets in the face of soaring legal claims linked to its US$63-billion acquisition of Monsanto.
The proposed deal will create the number-two player in the animal drug sector by revenue, behind Zoetis, but surpassing Merck and Boehringer Ingelheim.
Bayer is to be paid 70% of the total in cash, or US$5.32 billion, with the remaining US$2.28 billion consisting of Elanco shares.
According to a report by the Financial Times, for Bayer, the sale comes as it restructures to lower costs and offload assets in an effort to regain investor confidence following the Monsanto acquisition, which has left it facing allegations that Roundup, a weed killer containing glyphosate, causes cancer. The group has lost all three cases that have come to trial over the past year, and faces an additional 18,400 claims in US courts.
Bayer, which faces the possibility of having to pay billions of dollars in compensation, has lost a third of its market value since mid-2018. It now has a market capitalisation of 61.7 billion euros (~US$68.5 billion) according to the Financial Times report.
The latest deal is expected to close in mid-2020, subject to regulatory approvals and other customary closing conditions.
Reports of Bayer's intention to sell its vet unit first surfaced in the last quarter of 2018: http://www.efeedlink.com/contents/10-11-2018/4b57b724-330c-42fe-a741-13eb8424c748-a181.html