The board of directors of Elanco Animal Health has authorized a restructuring program to streamline its international operations, including shifting focus and resources to priority areas.
The proposed restructuring is expected to lead to a charge of approximately $37 million in the fourth quarter of fiscal year 2018, consisting of approximately $19 million in severance costs and approximately $18 million in asset write-off expenses. The total cash expenditures associated with the program are expected to be approximately $20 million, consisting primarily of severance costs.
The restructuring reflects a change from having a physical location to a distribution model in certain countries in connection with the separation of the company’s business from that of Eli Lilly & Co. following Elanco’s initial public offering.
Additionally, as a part of Elanco’s ongoing efforts in connection with its separation from Eli Lilly, the board authorized the write-off of certain assets that will not be utilized in the business on an ongoing basis.
In its filing with the U.S. Securities & Exchange Commission, the company said it expects to substantially complete the restructuring actions by December 2019.
Elanco also said it intends to comply with all applicable regulations in connection with the restructuring program, including timely information and consultation of employees and organizations, where applicable.