Elanco announces sale of aqua business for $1.3 billion

February 6, 2024 - Elanco Animal Health Incorporated recently announced it has entered into an agreement to sell its aqua business to Merck Animal Health for approximately $1.3 billion in cash, which represents approximately 7.4x the estimated 2023 revenue of the Elanco aqua business.

"A strategic decision resulting from a disciplined process over the last year, the sale of the aqua business allows us to prioritise our investments in larger markets with greater earnings potential over the medium and long term, while creating balance sheet flexibility," said Jeff Simmons, President and CEO of Elanco Animal Health. "We are focused on delivering consistent 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. Further, we are advancing our next wave of development projects, which we believe will contribute meaningful growth for Elanco through the second half of the decade. Importantly, the proceeds from this transaction combined with improved free cash flow from the business, will accelerate deleveraging with net debt to adjusted EBITDA expected in the high-3x to low-4x range by the end of 2025."

The transaction reinforces Elanco's focus and investment on its most significant value creation opportunities, notably in pet health and livestock sustainability. In addition to the expected US approvals in the first half of 2024 for Credelio Quattro, Zenrelia and Bovaer, Elanco is pursing a portfolio of clinical development projects that the company expects to have differentiated profiles and blockbuster potential in significant markets with meaningful growth and earnings potential. Elanco's targeted areas of focus include next generation products for pet parasiticides, dermatology and pain, as well as livestock sustainability. Additionally, the company is opportunistically pursuing platform-aligned targets, such as monoclonal antibodies, and other major emerging spaces of high unmet need.

"We are excited for the acquisition of Elanco's aqua products, solutions as well as the capabilities and expertise the team brings to our business," said Rick DeLuca, president, Merck Animal Health. "We believe this acquisition, coupled with our commercial and scientific prowess, will deliver enhanced benefits for our aqua customers. The addition of this innovative portfolio of cold water and warm water aqua products across vaccines, anti-parasitic treatments, water supplements and nutrition, Will establish Merck Animal Health as a leader in aqua."

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The Aquaculturists

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