Elanco Animal Health Incorporated (ELAN)

[DewDiligence]

ELAN acquires Bayer’s animal-health business for $7.6B in cash+stock:

https://finance.yahoo.com/news/1-elanco-buy-bayers-animal-101029292.html

Elanco Animal Health Incorporated (ELAN) today announced it has entered into an agreement with Bayer AG to acquire its animal health business in a transaction valued at US$7.6 billion. The transaction, which is subject to regulatory approval and other customary closing conditions, creates the second largest animal health leader [behind ZTS]…

The transaction will double Elanco’s Companion Animal business, advancing the company’s intentional portfolio mix transformation and creating a balance between its Food Animal and Companion Animal segments. Elanco expects the combined organization to continue to deliver mid-single digit revenue growth…

...Elanco will finance the transaction through both cash and equity. Bayer AG will receive $5.32 billion in cash…and $2.28 billion or approximately 68 million Elanco Animal Health common shares. This represents a 70 percent to 30 percent cash-to-equity mix.

Stock received by Bayer is subject to a 7.5 percent symmetrical collar centered on Elanco’s volume-weighted average price for the 30 trading days ended August 6, 2019 of $33.60.

The transaction is expected to close in mid-2020, subject to regulatory approvals and other customary closing conditions.

At the midpoint of the collar ($33.30), Bayer would receive an 18% equity stake in ELAN, but Bayer intends to monetize these shares in due course.