Elanco Animal Health Inc. announced Sept. 24 that the underwriters of its initial public offering (IPO) have fully exercised their option to purchase an additional 9.435 million shares at the initial public offering price of $24.00 per share, less underwriting discounts, bringing the total size of its recent IPO to 72.335 million shares.
Elanco’s shares began trading on the New York Stock Exchange Sept. 20 under the ticker symbol “ELAN.” In the first three days of trading, the shares traded around $33-34, considerably higher than the IPO share price of $24.
“This marks an exciting new chapter for Elanco as we start our journey as an independently operated, publicly traded company,” said Jeff Simmons, president and chief executive officer of Elanco.
The deal is being viewed as another test of investor appetite for large, stand-alone animal health businesses. Pharmaceutical giant Zoetis was the first such test, and that has resulted in a tripling of the stock price and a current price-to-earnings ratio that is now 60% more than its former parent.
One significant difference between the Elanco and Zoetis, though, is their portfolio of vaccines. Zoetis has a much higher percentage of vaccine-related offerings than Elanco does, which some analysts say gives it the advantage of higher product margins and less opposition from the clean food movement.
The global market for animal medicine is estimated to be worth about $33 billion and is expected to grow by 4-6% a year, according to research by analysts at Cowen Inc.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley led the Elanco offering.
Elanco also has announced that it will report its financial results for the third quarter on Nov. 6. This will mark Elanco’s first financial report as an independent company.
Founded in 1954, Elanco provides comprehensive products and knowledge services to improve animal health and food-animal production in more than 90 countries around the world. Located in Greenfield, Ind., the company has more than 5,800 employees worldwide.