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Bayer deal could leapfrog Elanco to become industry leader
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Elanco Animal Health said on Tuesday it would buy Bayerโ€™s veterinary drugs unit in a deal worth $7.6 billion, creating the second-largest animal health business sector.

The acquisition of Bayerโ€™s animal health unit is subjected to regulatory approval. As a part of the deal, Bayer will receive $5.32 billion in cash, subject to customary purchase price adjustments, and $2.28 billion made up of Elanco Animal Health common shares. The Bayer deal would push Elancoโ€™s gross debt to roughly five times adjust EBITDA after taking into account cost cuts it plans to make through the acquisition of Bayerโ€™s animal health unit.

Bayer deal Elanco industry leader

The Bayer Cross, one of the best-known trademarks in the world, is given a good clean at Cologne-Bonn airport. Photo: Bayer AG

The deal is expected to close by mid-2020, Elanco said.

Company statements on the Elanco - Bayer Merger

Elanco said in a statement the combined organization will โ€œcontinue to deliver mid-single-digit revenue growth while accelerating the achievement of adjusted gross margin goals and delivering double-digit adjusted EBITDA margin growth.โ€

Jeffrey N. Simmons, Elanco president and chief executive, said: โ€œThe move combines our long-standing focus on the veterinarian while meeting pet owners' changing expectation of pet care and access to products.โ€

โ€œThe combination with Elanco will give rise to a leading competitor in the animal health industry, benefiting customers, employees and shareholders alike,โ€ said Bayer chief executive Werner Baumann.

The division sells veterinary treatments for both pets and livestock, including the best-selling Advantage treatment for fleas and ticks.

Surpass Zoetis as Industry Leader

Now that the Bayer deal has materialized, more than 40 percent of the combined companyโ€™s sales would come from animal health products, a similar proportion to market leader Zoetis.

Bayer Deal Elanco industry leader

The Bayer deal is crucial in Elancoโ€™s effort to become an industry leader in the animal-healthcare sector.

Todayโ€™s news should please investors since pet-health has become a hotbed for investment for the past few years. According to a report by Global Market Insights, Inc., global animal-health market is expected to peak $36 billion by 2024. Burgeoning pet adoption across the world, especially in developing countries, is driving the surge in pet-health market growth. With increasing disposable incomes, pet owners would be able to spend more on animal healthcare. Wonder who's profiting from the trend in pet humanization? Here's a more detailed post on top companies in animal health.

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