Elanco, Bayer Are Aiming to Reach Animal-Health Deal Next Week


    Companies hope to announce agreement around Elanco earnings

    Elanco plans to pay at least part of purchase price in stock


By Riley Griffin, Dinesh Nair, and Manuel Baigorri, Bloomberg

August 8, 2019


Elanco Animal Health Inc., the business Eli Lilly & Co. listed last year, is aiming to reach an agreement as soon as next week to combine with Bayer AG’s animal-health unit, people with knowledge of the matter said.


The companies hope to announce a deal around the time of Elanco’s Aug. 13 earnings release, the people said, asking not to be identified as the discussions are private. Elanco, which has a market value of about $12.3 billion, plans to pay at least part of the acquisition cost using stock, the people said.


Elanco lost 4.2% Wednesday to close at $31.47. Bayer rose as much as 2.6% early Thursday in Frankfurt.


Bayer is selling units to sharpen its focus after the $63 billion purchase of Monsanto, which saddled it with thousands of lawsuits claiming that the Roundup weedkiller it acquired in that deal causes cancer. The German giant agreed to unload its majority stake in a chemicals venture Wednesday in a deal valued at $3.9 billion, and two Roundup trials have been delayed as pressure builds on Chief Executive Officer Werner Baumann to fashion a settlement.


Bayer would get a significant minority stake in Elanco under the deal being discussed, according to another person. The companies are currently hammering out potential antitrust issues by identifying which businesses they will likely need to sell to gain regulatory approval, the person said.


While Bayer prefers a deal with Elanco, no final agreements have been reached and the talks could drag on or fall apart, the people said. Bayer may proceed with its previous plans for a broader auction process if it can’t agree on terms with Elanco by early September, one person said.


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