Merck Animal Health To Buy Elanco's Aqua Business In $1.3 Bln Cash Deal; Elanco Up In Pre-market

(RTTNews) - Merck Animal Health, a division of drug major Merck & Co., Inc. (MRK), announced that it has signed a definitive agreement to acquire the aqua business of Elanco Animal Health Inc. (ELAN) for $1.3 billion in cash.

In pre-market activity on the NYSE, Elanco Animal shares were gaining around 6% to trade at $15.60.

The acquisition is expected to be completed by mid-year 2024, subject to approvals from regulatory authorities and other customary closing conditions.

The acquiring business includes a portfolio of medicines and vaccines, nutritionals and supplements for aquatic species; two related aqua manufacturing facilities in Canada and Vietnam; as well as a research facility in Chile.

Elanco's aqua business generated an estimated $175 million in revenue and approximately $92 million in adjusted EBITDA, based on 2023 preliminary results.

Merck Animal Health expects the acquisition to broaden its aqua portfolio with products, such as CLYNAV, a new generation DNA-based vaccine that protects Atlantic salmon against pancreas disease, and IMVIXA, an anti-parasitic sea lice treatment.

Rick DeLuca, president, Merck Animal Health, said, "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."

In its statement, Elanco said it plans to use the expected $1.05 billion to $1.1 billion of after-tax cash proceeds to pay down a portion of the Term Loan B debt.

In the deal, Goldman Sachs & Co., LLP acted as financial advisor to Merck Animal Health.