Merck Acquires Elanco's Aqua Health Division for $1.3B

Merck said Monday it will acquire Elanco Animal Health and its aquatics business for $1.3 billion in cash, bolstering its portfolio of aquatic animals and animal health products.

Elanco shares rose 7% to $15.8 a share. Merckand's animal health division acquired fish health products maker Scan Aqua and fish health monitoring equipment makers Vaki and Antelliq Corp in 2019.

The deal, expected to close mid-this year, will help Merck access its following products. : Clynav, a DNA-based vaccine that protects Atlantic salmon from pancreatic disease, and Imvixa, an anthelmintic treatment against sea lice. Rick DeLuca, president of Merck Animal Health, said adding Elanco products will position Merck Animal Health as a leader in the water sector.

Merck also has access to Elanco's manufacturing facilities in Canada and Vietnam and its research facilities in Chile. Elanco said the deal will reduce its debt by $1.05 billion to $1.1 billion, or 20%, and help increase its investments in animal health products, a larger market.

CEO Jeff Simmons said in an interview that Elanco's animal health and welfare pipeline delivers more value for every dollar. The company has six late-stage products in its animal health and welfare pipeline that, if approved, could reach the U.S. market by 2025. Total sales for the Aqua business in the third quarter were $42 million, or 4% of Elancoand's total sales.

Piper Sandler analyst David Westenberg said that Elancoand's $1.3 billion valuation of its aquaculture business is justified by high growth and strong margins compared to aquaculture and other animal proteins.