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Elanco to acquire BIVI U.S. pet vaccines portfolio

Eight new product lines and manufacturing site to transfer to Elanco, subject to FTC approval and closing of Boehringer/Sanofi asset swap.

Elanco U.S. Inc., a subsidiary of Eli Lilly & Co., announced Oct. 5 an agreement to acquire Boehringer Ingelheim Vetmedica Inc.'s (BIVI) U.S. feline, canine and rabies vaccines portfolio — as well as a fully integrated manufacturing and research and development (R&D) site — for $885 million, including the estimated cost of acquired inventory. The deal will diversify Elanco's U.S. companion animal portfolio by complementing its offerings for dogs and cats.

Joining Elanco's U.S. companion animal portfolio — which currently includes parasiticides, pain and dermatology medicines — will be routinely administered vaccines for bordetella, Lyme disease, rabies and parvovirus, among others. Also included in the agreement are several pipeline assets.

The Ft. Dodge, Iowa-based facility brings the capacity to manufacture the acquired products as well as R&D and testing capabilities, including an on-site veterinary research center and lab space.

"We understand the unique bond that owners share with pets and are committed to helping those pets live longer, healthier lives," said Jeff Simmons, president, Elanco Animal Health. "With a growing portfolio addressing both prevention and treatment of disease, Elanco can partner with veterinarians and pet caregivers to do just that."

The acquisition is anticipated to close by early 2017, subject to approval by the Federal Trade Commission (FTC) and also subject to antitrust approval and closing of Boehringer Ingelheim's asset swap transaction with Sanofi.

The sale of BIVI's U.S. pet vaccines business and Ft. Dodge manufacturing site is a required step in Boehringer Ingelheim's acquisition of Merial.

The current vaccine portfolio to be acquired has experienced revenue growth over the past three years, and Lilly expects the acquisition to be accretive to generally accepted accounting principles (GAAP) earnings in 2019 and to non-GAAP earnings in 2018.

Dr. John C. Lechleiter, Lilly chairman, president and chief executive officer, said the planned acquisition of BIVI's U.S. feline, canine and rabies vaccines portfolio reaffirms Lilly's confidence in Elanco's growth potential.

"As a result of the acquisition, Elanco will bring greater value to customers by providing a suite of options for preventing common diseases in companion animals," Lechleiter said. "Coupled with our robust food animal portfolio, this addition further strengthens Elanco's position in the global animal health business."

Jefferies LLC is acting as the exclusive financial advisor to Elanco and Lilly in this transaction, and Paul Hastings LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal advisors.

Elanco provides comprehensive products and knowledge services to improve animal health and food-animal production in more than 70 countries around the world. Founded in 1954, Elanco is a division of Eli Lilly & Co. Elanco U.S., a wholly owned subsidiary of Lilly, is the U.S. entity acquired as part of the Novartis acquisition.

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