Elanco to acquire Lohmann Animal Health

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Elanco, the animal health division of Eli Lilly and Company (NYSE:LLY), today announced an agreement to acquire Lohmann SE (Lohmann Animal Health), a privately-held company headquartered in Cuxhaven, Germany.

Lohmann Animal Health is a global leader in the supply of poultry vaccines, and also markets a range of feed additives.

The acquisition will establish Elanco as a global poultry leader, solidify Elanco's vaccine presence, broaden Elanco's product offerings, and significantly augment Elanco's vaccine manufacturing capabilities.

"Effectively competing in the animal vaccine segment is a cornerstone of Elanco's long-term strategy and is one more way we will expand the value we create for customers," said Jeff Simmons, senior vice president of Eli Lilly and Company and president of Elanco Animal Health.

"The addition of Lohmann Animal Health provides a unique opportunity for Elanco to expand our presence in the global poultry market and to enter the global poultry vaccine market with a solid base, established products, and global commercial and manufacturing capabilities."

This acquisition complements Elanco's mission to help the global food chain deliver a safe, affordable, sufficient food supply. "We believe innovation in food production is one of the most important ingredients to feeding a growing global population," Simmons said.

"Elanco has continued to invest significantly in animal health in the past few years, growing businesses and expanding our pipeline. This acquisition will support further pipeline growth and build on Elanco's proven track record for successfully delivering new innovation and integrating acquisitions. We will continue to seek opportunities that support those efforts."

"As the middle class grows in size and affluence throughout the world, the demand for eggs and poultry is growing rapidly. However, egg layer productivity is now shrinking after decades of increases," said William (Bill) Weldon, vice president of Elanco R&D.

"Delivering innovation to this industry is critical. Without it, we're on pace to double the number of hens needed, plus the massive resources to support them, in order to meet demand in 2050."

Under the terms of the agreement, Lilly will acquire all assets of Lohmann SE and its subsidiary, Lohmann Animal Health. These assets include a range of vaccines and feed additives, commercial capabilities, and manufacturing sites in Cuxhaven, Germany and Winslow, Maine. No other terms of the transaction were disclosed.

The transaction is expected to close in the second quarter of 2014, contingent upon clearance from regulatory authorities and other customary closing conditions.

As a result of business combination accounting adjustments and transaction costs associated with this acquisition, Lilly has lowered its full-year 2014 earnings per share guidance to be in the range of $2.72 to $2.80 on both a reported and non-GAAP basis. Updates, if any, to specific line item guidance will be provided on the company's first-quarter 2014 earnings call on April 24, 2014.



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