Eli Lilly and Company on Tuesday announced an agreement to acquire Novartis Animal Health for approximately $5.4 billion in a transaction that the company says will strengthen and diversify its animal health business, Elanco.
Upon completion of the acquisition, Elanco will be the second-largest animal health company in terms of global revenue, will solidify its number two ranking in the U.S., and improve its position in Europe and the rest of the world, a Lilly statement said.
With a presence in approximately 40 countries and 2013 revenue of approximately $1.1 billion, Novartis Animal Health creates products for pets, farm animals and farmed fish.
Lilly will acquire Novartis Animal Health's nine manufacturing sites, six dedicated research and development facilities, a global commercial infrastructure with a portfolio of approximately 600 products, a robust pipeline with more than 40 projects in development, and an experienced team of more than 3,000 employees.
The transaction is expected to close by the end of the first quarter of 2015, subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, similar requirements outside the U.S., and other customary closing conditions.
With both Elanco and Novartis Animal Health, Lilly expects to achieve estimated cost savings of approximately $200 million per year within three years of deal closing, equating to more than 10% of operating expenses from the combined animal health businesses.
John C. Lechleiter, Ph.D., Lilly's chairman, president and chief executive officer, said that the acquisition of Novartis Animal Health validates Lilly's commitment to Elanco as a key component of Lilly's business going forward.
"Animal health continues to represent an attractive growth opportunity for Lilly. We intend to keep Elanco and to take advantage of the substantial synergies between our animal health and human health businesses," noted Lechleiter.
"Significant investments in our animal health business in recent years have enabled Elanco to double its revenue since 2008, leading the industry in growth. Global trends suggest continued sustained demand for animal health products in the years ahead."
Lechleiter said through the acquisition, the company intends to create value for shareholders by adding to the pipeline of innovative animal health assets, increasing sales through a larger commercial footprint, and improving efficiencies and lowering costs.
"Lilly emerged from our competitive process as the clear best buyer for Novartis Animal Health and a good home for our employees," said Joseph Jimenez, CEO of Novartis. "We look forward to a smooth transition of the business over the next several quarters."
Source: Eli Lilly