Elanco Animal Health is buying Bayer's animal health unit in a cash and stock deal worth $7.6 billion.
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The deal creates the second largest animal health company in the world.
Elanco will pay $5.3 billion in cash and Bayer will receive $2.3 billion in Elanco stock.
"In our first four quarters as an independent company, we have validated the significant value creation potential from a dedicated focus on animal health and a targeted strategy," said Jeffrey N. Simmons, president and chief executive officer of Elanco. "Joining Elanco and Bayer Animal Health strengthens and accelerates our IPP strategy, transforms our portfolio with the addition of well-known pet brands, brings an increased presence in key emerging markets, expands innovation, and accelerates our margin expansion journey."
In the last fiscal year the unit generated sales of $1.8 billion, Bayer said.
The transaction will double Elanco's Companion Animal business.