Elanco Animal Health Sells Aqua Business for $1.3 Billion

Elanco Animal Health Incorporated (NYSE: ELAN) has just completed the sale of its aqua business to Merck Animal Health for approximately $1.3 billion in cash. This deal will provide Elanco with approximately $1.05-$1.1 billion in net proceeds for debt paydown in the third quarter of 2024.

Todd Young, the Executive Vice President and CFO of Elanco Animal Health, stated that this transaction will allow the company to concentrate its focus on high-value opportunities in pet health and livestock sustainability while creating balance sheet flexibility. He also mentioned that Elanco has demonstrated a positive trajectory over the past three quarters, with underlying revenue growth and pipeline progress, and has been able to reduce its debt.

The company expects to pay down approximately $1.3 to $1.4 billion of debt in 2024, ending the year with net debt to adjusted EBITDA in the mid-4x range. Furthermore, it is projected that net debt to adjusted EBITDA will improve further in 2025 to the high-3x to low-4x range.

Elanco Animal Health is a global leader in animal health, dedicated to innovating and delivering products and services to prevent and treat disease in farm animals and pets. With nearly 70 years of animal health heritage, the company is committed to helping customers improve the health of animals in their care and making a meaningful impact on local and global communities.

The company will provide additional information about the transaction’s impact on its 2024 financial outlook during the second quarter earnings call in August. Following these announcements, the company's shares moved -2.9%, and are now trading at a price of $13.54. For the full picture, make sure to review Elanco Animal Health's 8-K report.

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