© Reuters. Logo and flags of Bayer AG are pictured outside a plant of the German pharmaceutical and chemical maker in Wuppertal(Reuters) - Elanco Animal Health (N:ELAN) said on Tuesday it would buy Bayer's (DE:BAYGn) veterinary drugs unit in a cash and stock deal valued at $7.6 billion, creating the second largest animal health business and expanding Elanco's reach in the pet e-commerce space.
The animal health market has seen Pfizer Inc (N:PFE) and Eli Lilly and Co (N:LLY) successfully floating their veterinary medicine units on the stock market as independent entities.
The deal is expected to close by mid-2020, Elanco said.
The two companies said Bayer would receive $5.3 billion in cash and $2.3 billion worth of Elanco stock based on the unaffected 30-day average price as of Aug. 6 and subject to a 7.5% symmetrical collar.
The price tag represents an implied multiple of 18.8 times adjusted core earnings, Bayer added.
Reuters reported last month that Bayer had approached former Eli Lilly (N:LLY) unit Elanco to discuss a possible combination that would be number two after industry leader Zoetis (N:ZTS) and ahead of unlisted Boehringer Ingelheim - which bought animal health assets from Sanofi (PA:SASY) - and drugmaker Merck & Co (N:MRK).
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