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GREENFIELD, Ind .– (BUSINESS WIREElanco Animal Health Incorporated (NYSE: ELAN) announced today the signing of an agreement with Bayer AG (ETR: BAYN) to acquire its animal health business as part of a transaction valued at 7.6 billion US dollars. The transaction, which is subject to regulatory approval and other customary closing conditions, creates the second largest animal health leader while strengthening and accelerating the company's proven innovation strategy. , Portfolio and Productivity (PPI).
The operation will double Elanco's Pet business, advancing the intentional transformation of the company's portfolio composition and creating a balance between its Pet and Pet segments. Elanco expects the combined company to continue to generate revenue growth in the range of 1 to 10%, while accelerating the achievement of adjusted gross margin targets and a EBITDA margin growth adjusted to double digits.
"During our first four quarters as an independent company, we validated the significant value creation potential of a particular interest in animal health and a focused strategy, "said Jeffrey N. Simmons, President and CEO. Chief Executive Officer of Elanco. "By joining Elanco and Bayer Animal Health, we are strengthening and accelerating our IPP strategy, transforming our portfolio with the addition of well-known pet brands, strengthening our presence in key emerging markets, developing innovation and accelerating our process. expansion margin. This move brings our veteran attention together for a long time while meeting the changing expectations of pet owners in terms of care and access to pet products. "
Bayer AG Managing Director Werner Baumann added:Our animal health sector is one of the pioneers in this sector, having built an attractive portfolio and acquired well-established market positions in the pet and farm segments. And now, the merger with Elanco will create a leading competitor in the animal health sector, benefiting both customers, employees and shareholders. "
The addition of Bayer Animal Health strengthens all the key drivers of Elanco's intellectual property protection strategy.
- Wallet: The addition of Bayer Animal Health's activities is accelerating the transformation of Elanco's portfolio by raising Companion Animal to nearly half of all operations. The combination creates access to new segments of the parasiticide market with topical treatments and collars, and propels Elanco into the development of e-commerce and pet retail spaces. This complements Elanco's already strong veterinary presence, allowing him to reach more pet owners. With the purchase of feed animals, the acquisition will add a number of brands of anchor cattle, create a bioprotective portfolio and extend the aquatic presence of. Elanco with hot water fish. The increased global presence will enable Elanco to better serve veterinarians, farmers and pet owners.
- Innovation: The transaction completes Elanco's already strong research and development portfolio with eight significant new development projects and more than 30 life cycle products, while providing certain access rights to Bayer's CropScience research and development pipeline. decommissioned pharma-clinical assets. It adds superior capabilities for R & D platforms in key areas, as well as innovative technology platforms for dosing and distribution. The acquisition also adds power and scale to Elanco's research and development team.
- Productivity: The combination of Bayer and Elanco accelerates Elanco's margin expansion opportunities and produces an increase in adjusted earnings per share for the first full year after closing and an increase in the percentage of increase below 10% double digits the second year. The acquisition also allows Elanco to achieve a 60% adjusted gross margin and an adjusted EBITDA margin of 31% faster than on an individual basis,2 with the increased ability to improve beyond. It generates operating cash flow of approximately US $ 1 billion per year as of the third year following the closing, allowing Elanco to achieve gross adjusted EBITDA 3 times over the same period, as well as potential synergies of USD 275-300 million. Finally, Elanco will bring together two complementary companies dedicated to animal health in order to operate on a suitable infrastructure for the future.
"This combination will link two complementary animal health entities, previously under the human pharma division, to a dedicated product delivery company for farmers, veterinarians and pet owners. This creates increased speed, attention and investment to provide customers with greater access and options at different price levels to make a difference in the lives of animals, "said Simmons. "We look forward to adding the broad expertise of Bayer Animal Health's employees. Ultimately, we believe that this increased capacity and knowledge will allow us to better support the veterinarian, creating a bridge between the pet owner and the veterinarian where relationships do not exist today. "
Key terms and financing
Elanco will finance the transaction both in cash and in equity. Bayer AG will receive $ 5.32 billion in cash, subject to customary adjustments to the purchase price, as well as $ 2.28 billion, or about 68 million common shares of Elanco Animal Health. This represents a composition of 70% to 30% of the equity / equity ratio. The shares received by Bayer are subject to a symmetrical collar of 7.5% centered on Elanco's volume-weighted average price for the 30 trading days ending on August 6, 2019, at $ 33.60. Elanco got a bridge commitment for the cash portion of the counterpart. It intends to finance the cash consideration by combining new debt and equity. At closing, Elanco expects its gross debt to adjusted EBITDA ratio to be approximately 5 times, considering expected cost synergies. The strong combined cash flow generation profile will enable Elanco to rapidly reduce its gross financial debt from less than 3x gross debt to adjusted EBITDA by the end of 2022. The transaction is expected to be finalized in mid-2020, subject to regulatory approvals closing conditions.
advisors
Goldman Sachs acted as financial advisor to Elanco and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Hengeler Mueller acted as legal counsel to Elanco. Elanco's Board of Directors has received a Notice of Fairness from Duff & Phelps.
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DISSEMINATION OF THE WEBBCAST AND CALL FOR THE CONFERENCE
Elanco will host a special web conference and teleconference at 8:00 am EST, during which the company's executives will discuss today's announcements and answer questions from financial analysts. Investors, analysts, members of the media and the public can access the live webcast and related slides by visiting the Elanco website at https://investor.elanco.com and selecting Events. and presentations. A retransmission of the webcast will be archived and available a few hours after the event on the company's website, at https://investor.elanco.com/investor/events-and-presentations.
About ELANCO
Elanco (NYSE: ELAN) is a global animal health company that develops knowledge products and services to prevent and treat diseases in livestock and pets in more than 90 countries. With over 65 years of experience, we are rigorously innovating to improve animal health and benefit customers, while fostering an inclusive, cause-based culture for more than 5,800 employees. At Elanco, our vision of food and friendliness enriches life – all to improve the health of animals, humans and the planet. Learn more at www.elanco.com.
ABOUT BAYER
Bayer is a global company with key skills in the life sciences, namely health care and nutrition. Its products and services are designed to benefit people by supporting efforts to overcome the major challenges presented by a growing and aging world population. At the same time, the Group aims to increase its revenue potential and create value through innovation and growth. Bayer adheres to the principles of sustainability and the Bayer brand stands for trust, reliability and quality around the world. During fiscal year 2018, the group employed approximately 117,000 people and achieved a turnover of 39.6 billion euros. Capital expenditure amounted to 2.6 billion euros and R & D expenses to 5.2 billion euros. For more information, visit www.bayer.com.
Forward-looking statement
Non-historical statements in this release, including statements regarding the proposed acquisition of Bayer AG's Animal Health Division, the expected timing of the completion of the transaction, the expected financing of the transaction, the financial results and future operations, the benefits and synergies of the transaction. , future opportunities for combined businesses and any other statements regarding events or developments that we believe will or may occur in the future, may be "forward-looking" statements within the meaning of the 1995 Act Private Securities Litigation Reform Act, and involve a number of risks and uncertainties. A number of important factors could cause actual events to differ materially from those suggested or indicated in these forward-looking statements, and you should not place undue reliance on such forward-looking statements. These factors include risks and uncertainties related to, among other things: (1) the inability to complete the transaction on time; (2) the non-closing of the transaction for any other reason; (3) the possibility that the integration of Bayer AG's activities and activities in the animal health sector with those of Elanco is more difficult and / or longer than expected, could be more expensive than expected and could have unforeseen adverse health consequences for Bayer AG's animals or Elanco's existing businesses; (4) the effect of the announcement of the transaction on the commercial relations, results of operations and respective activities of Elanco, Bayer AG or the combined company; (5) diversion of management attention from ongoing business concerns; and (6) the ability to obtain or use financing or refinancing related to the transaction on acceptable terms or at all; (7) the risks associated with third-party contracts containing consent and / or other provisions that may be triggered by the proposed transaction; (8) the negative effects of the announcement or completion of the transaction on the market price of Elanco common shares; (9) Elanco's ability to retain and hire key personnel; (10) Management's response to any of the above factors; and (11) other factors that may affect the future results of the Combined Company described in the "Risk Factors" section of Elanco's Annual Report on Form 10-K for the year ended December 31, 2018, and in the consolidated financial statements. other documents filed by Elanco with the Exchange Commission. Forward – looking statements made herein speak only as of the date hereof and of any forward – looking statement, whether as a result of new information, future events and developments or otherwise, except as permitted by law. required.
1 Certain access rights to the Bayer CropScience pipeline and pharmaceutical clinical assets without priority.
2 2022 vs 2023
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