Elanco to sell aqua business to Merck Animal Health in US$1.3 billion deal

USA- Elanco Animal Health Inc. has announced the sale of its aquaculture business to Merck Animal Health for a staggering US$1.3 billion in cash.

The deal, which represents approximately 7.4 times the estimated 2023 revenue of Elanco’s aquaculture business, is expected to enable Elanco to focus its investments in larger markets with greater earnings potential while alleviating debt pressures.

Jeff Simmons, President and CEO of Elanco Animal Health, emphasized the strategic importance of the decision, stating, “The sale of the aqua business allows us to prioritize our investments in larger markets with greater earnings potential over the medium and long term while creating balance sheet flexibility.”

This move underscores Elanco’s commitment to delivering significant innovation and promoting growth in its core segments.

Elanco’s aquaculture business includes products designed for both warm-water and cold-water species, resulting in significant revenue and adjusted EBITDA. The transaction includes the transfer of manufacturing sites and approximately 280 employees involved in the aqua business. 

Upon completion of the sale, Elanco intends to use a significant portion of the proceeds to pay down debt, thereby improving its financial position and reducing interest expenses.

Rick DeLuca, President of Merck Animal Health, expressed enthusiasm about the acquisition, stating, “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.”

Merck Animal Health aims to leverage this acquisition to consolidate its position as a leader in the aqua segment, providing improved benefits to customers through innovative products and solutions.

The transaction, subject to regulatory approvals and customary closing conditions, is expected to be completed around mid-year. Elanco plans to provide additional details about the transaction when it announces its fourth-quarter and full-year fiscal 2023 financial results on February 26.

BofA Securities Inc. is serving as the exclusive financial adviser to Elanco, while White & Case LLP is providing legal counsel for the transaction.

The sale of Elanco’s aqua business represents a strategic realignment for the company, positioning it to take advantage of growth opportunities in its core markets and provide sustainable value to its stakeholders.

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