Merck bolsters animal health unit with Allflex deal

Reuters — Merck and Co. said on Friday it will buy privately-held French company Antelliq Group, which makes digital identification products for livestock, for about 2.1 billion euros (C$3.19 billion) to bolster its fast-growing animal health business.

The move affirms the drugmaker’s commitment to the business, which Wall Street analysts have long seen value in separating just as rival drugmakers Eli Lilly and Pfizer did.

Pfizer’s Zoetis raised US$2.2 billion in a 2013 IPO, while Elanco, the former animal health business at Lilly, raised US$1.51 billion from an IPO in September.

Merck CEO Kenneth Frazier had said in October that the company was a “good owner” of its animal health unit.

“We believe that we run this business very well inside the company compared to our competitors,” he had said.

Merck’s unit has been a big player in the animal health segment, bringing in sales of US$3.88 billion in 2017. Zoetis recorded US$5.31 billion in revenue, while Elanco brought Lilly US$3.09 billion in sales the same year.

Merck said Antelliq will be a wholly owned and separately operated subsidiary within its animal health division.

Antelliq has been the brand name since February for the Allflex Group, whose brands include Allflex, SCR, Biomark and Sure Petcare.

Antelliq’s products, which brought in 360 million euros (C$546.3 million) in sales in the year ended Sept. 30, provide veterinarians, farmers and pet owners with digital technology that monitors animals and predicts disease in them.

These products allow access to real-time, actionable information to help improve livestock management and health outcomes, Merck said in a statement.

Merck will assume Antelliq’s debt of 1.15 billion euros (C$1.75 billion), which it intends to repay shortly after the closing of the deal, expected in the second quarter of 2019.

Private equity firm BC Partners currently owns a majority stake in Antelliq.

Reporting for Reuters by Tamara Mathias in Bangalore.

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