Elanco US Inc., a subsidiary of Eli Lilly and Co. (NYSE: LLY), said it agreed to acquire a US feline, canine and rabies vaccines portfolio and a fully integrated manufacturing and R&D site from Boehringer Ingelheim Vetmedica Inc. (BIVI), for $885 million.

The deal will diversify Elanco’s US companion animal portfolio by complementing its offerings for dogs and cats. Joining Elanco’s US 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 deal are several pipeline assets.

The Fort Dodge, Iowa-based facility brings 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.”

“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,” said Lilly’s chairman, president and chief executive John C. Lechleiter, PhD. “Coupled with our robust food animal portfolio, this addition further strengthens Elanco’s position in the global animal health business.”

“This agreement is an important step toward a successful acquisition of Merial,” said Dr. Albrecht Kissel, president and CEO of Boehringer Ingelheim Vetmedica Inc. “This was a highly complex decision from a business and from an emotional perspective. It was certainly not taken lightly particularly in view of the history and significant positive developments of this business over the past years.”

The acquisition is anticipated to close by early 2017, subject to regulatory approval and closing of Boehringer Ingelheim’s asset swap transaction with Sanofi.

The sale of BIVI’s US pet vaccines business and Fort Dodge manufacturing site is a required step toward the acquisition of Merial by Boehringer Ingelheim.

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 GAAP earnings in 2019 and to non-GAAP earnings in 2018.

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

Elanco provides comprehensive products and services to improve animal health and food-animal production in more than 70 countries, and has more than 6,500 employees worldwide. Elanco’s headquarters and research facilities are in Greenfield, Indiana. Founded in 1954, Elanco was acquired by Lilly as part of the Novartis acquisition.

Founded in 1876 by Colonel Eli Lilly, and based in Indianapolis, Indiana, Lilly is a global healthcare leader with 41,000 employees worldwide, and nearly $20 billion in revenues in 2015.

Boehringer Ingelheim Vetmedica Inc. (BIVI) is the US animal health division of Boehringer Ingelheim GmbH. BIVI develops, manufactures and markets novel and innovative solutions for the prevention and treatment of disease in the cattle, equine, pet and swine markets. BIVI is the fifth largest animal health company in the US. The company’s US headquarters are within the KC Animal Health Corridor in St. Joseph, Missouri.

With more than 3,800 employees worldwide, Boehringer Ingelheim Animal Health achieved net sales of about 1.4 billion euros in 2015. Boehringer Ingelheim is one of the world’s 20 leading pharmaceutical companies with about 47,500 employees. Founded in 1885, and headquartered in Ingelheim, Germany, the focus of the family-owned company is on researching, developing, manufacturing and marketing new medications of high therapeutic value for human and veterinary medicine.

Photo: John C. Lechleiter, PhD, Chairman, President & CEO, Eli Lilly and Co.

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