Bayer is selling its animal health business to US firm Elanco for $7.6bn (£6.3bn) as the German pharmaceuticals and chemicals giant continues to offload assets in the face of mounting legal costs related to its Roundup weedkiller.
The deal, which is subject to regulatory approval, will create the second largest veterinary medicine business in the world behind industry leader Zoetis, which was spun out of Pfizer in 2013.
The two companies said Bayer would receive $5.3bn in cash alongside $2.3bn of Elanco stock, based on a price of $33.60 per share – the 30-day average price as of 6 August.
Elanco said it expected the transaction to be completed by the middle of 2020.
Bayer has been divesting assets and cutting costs recently in an attempt to regain investor confidence after its acquisition of agricultural chemical firm Monsanto left the company embroiled in a string of lawsuits.
The cases alleged that Roundup, a Monsanto weedkiller, caused cancer. It was reported earlier this month that Bayer was in talks to settle 18,000 lawsuits relating to Roundup for $8bn.
Bayer sold its Copperstone sun protection business Coppertone to cosmetics group Biersdorf for $550m in May, before offloading footcare firm Dr Scholl to private equity group Yellow Wood Partners for $585m last month.
The group had announced its intention to sell its animal health business last November, and Bloomberg had reported Elanco and Bayer were close to closing a deal earlier this month.
Bayer chief executive Werner Baumann said: “Our Animal Health business is among the pioneers of this sector”. The sale to Elanco “will give rise to a leading competitor in the animal health industry, benefiting customers, employees and shareholders alike,” he added.
Elanco president and chief executive Jeffrey N. Simmons said the acquisition “combines our long-standing focus on the veterinarian while meeting pet owners’ changing expectation of pet care and access to products.”
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