Elanco Animal Health Incorporated (NYSE: ELAN) jumped 3.1% after announcing that it had entered a definitive agreement to acquire Kindred Biosciences Inc. (NASDAQ: KIN). Following the announcement of the agreement, KindredBio saw its stock jump 45.27%.
Elanco expanding to the pet health market
The acquisition expedites Elanco’s expansion strategy into the lucrative pet health market and advances its presence in the rapidly growing dermatology sector. KindredBio will bring three potential dermatology blockbusters to market by 2025. The company has various other R&D programs for unmet needs and chronic diseases such as canine parvovirus. Elanco’s potential to launch treatments, win market share, and grow in the dermatology market through fully accretive revenue dollars is enhanced by KindredBio’s innovation pipeline. Interestingly, Elanco expects the merger to bring $100 million to its previously stated innovation revenue target of $500 million to $600 million by 2025, with substantial growth potential beyond that time frame.
Elanco CEO Jeff Simmons said that the complementary combination focuses on one of the most exciting areas of pet health and one where Elanco sees a strategic requirement to provide a distinctive competitive solution. Simmons said that the acquisition would enhance the company’s IPP strategy and accelerate the shift into pet health. Finally, Simmons feels that the merger will enable Elanco to provide innovative solutions to veterinarians and pet owners in areas where medical requirements are unmet or underserved, resulting in continuous growth in the pet therapeutic sector.
Elanco to acquire KindredBio for $440 million
The acquisition is an enhnacement of the existing relationship between the company that started with commercial rights licensing of KindreBio’s canine parvovirus treatment. Elanco will acquire all KindredBio’s outstanding shares at $9.25 per share or around $440 million. Elanco will fund the acquisition using pre-payable debt.