Elanco is selling its aqua business to Merck Animal Health

Elanco Animal Health Inc. has agreed to sell its aquaculture business to Merck Animal Health.

The Feb. 5 announcement stated that the company is being sold for about US$1.3 billion, about seven times the estimated 2023 revenue of the Elanco business.

Jeff Simmons, president and chief executive officer of Elanco Animal Health, said this was “a strategic decision” which will allow them to invest in larger markets with greater earning potential.

“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 U.S. market by 2025,” said Simmons.

“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.”

Rick DeLuca, president, of Merck Animal Health, said the company is excited about the acquisition.

“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,” DeLuca said.

Elanco plans to use the expected US$1.05 billion to $1.1 billion of after-tax cash proceeds to pay down a portion of the Term Loan B debt.