Elanco Animal Health Incorporated today announced that it has reached an agreement to sell its aqua business to Merck Animal Health for approximately $1.3 billion in cash, representing approximately 7.4 times the estimated 2023 revenues of the Elanco Aqua business.
Elanco’s aqua business includes products for both hot water and cold water species, generating estimated revenues of $175 million and adjusted EBITDA of approximately $92 million, based on preliminary 2023 results, excluding allocation of corporate costs. . The divestiture includes the transfer of the current marketing brand, Aqua R&D projects, manufacturing sites in Prince Edward Island, Canada and Dong Nai, Vietnam, and approximately 280 commercial and manufacturing employees.
Jeff Simmons said, “A strategic decision resulting from a disciplined process over the last year, the sale of the aqua business allows us to prioritize our investments in larger markets with greater earnings potential in the medium and long term, while maintaining balance sheet flexibility. Makes it.” , President and Chief Executive Officer of Elanco Animal Health. “We are focused on continuing to deliver high-impact innovation and continue to have confidence in our late-stage pipeline with six potential blockbuster products expected in the US market by 2025.”
Additionally, Simmons said the company is pursuing its next wave of development projects that will contribute to meaningful growth for Elanco during the second half of the decade.
He added, “Importantly, the proceeds from this transaction, coupled with improved free cash flow from the business, will deliver net debt to adjusted EBITDA expected in the high-3x to low-4x range by the end of 2025.” “Will accelerate deleveraging.”
Elanco said it plans to use $1.05 billion to $1.1 billion of expected after-tax cash proceeds to pay off a portion of the Term Loan B loan.
Elanco said the transaction strengthens its focus and investment on its most significant value creation opportunities, particularly pet health and livestock sustainability. In addition to US approvals expected in the first half of 2024 for Credelio Quattro, Generalia and Bower, Elanco is pursuing a portfolio of clinical development projects, providing the company with differentiated profiles and blockbusters in important markets with meaningful growth and earnings potential. Capacity is expected. ,
Elanco’s targeted areas of focus include pet parasiticides, dermatology and pain as well as next generation products for livestock sustainability. Additionally, the company is opportunistically pursuing platform-aligned targets, such as monoclonal antibodies, and other key emerging niches with high unmet need.
“We are excited to acquire Elanco’s aqua products, solutions, as well as the capabilities and expertise the team brings to our business,” said Rick DeLuca, president of Merck Animal Health. “We believe that this acquisition, combined with our commercial and scientific capability, will provide improved benefits for our aqua customers. Cold water and warm water aqua products in vaccines, anti-parasite treatments, water supplements and nutrition “The addition of this innovative portfolio will position Merck Animal Health as a leader in aqua.”
The transaction, which is subject to regulatory approvals and customary closing conditions and adjustments, is expected to close around mid-year. The company plans to further discuss the transaction when it releases its fourth quarter and full-year fiscal 2023 financial results on February 26.