Elanco Animal Health (ELAN) said Wednesday it would buy Kindred Biosciences (KIN) for roughly $440 million, in a move that could help it take on rival Zoetis (ZTS).
- Co announced the parties have entered into a definitive agreement for Elanco to acquire KindredBio, a biopharmaceutical company focused on developing novel pet therapeutics based on validated human targets. The acquisition further accelerates Elanco's expansion in the attractive pet health market, particularly advancing Elanco's presence in the fast-growing billion-dollar dermatology category.
- The acquisition agreement builds on Elanco's existing relationship with KindredBio, which began with licensing the global commercial rights of KindredBio's late-stage treatment for canine parvovirus, and continues Elanco's proven approach as an innovation partner of choice.
- Under the terms of the agreement, Elanco will acquire all outstanding stock of Kindred Biosciences at a price of $9.25 per share, or approximately $440 million, a premium of 52% based on the 30-day average. Elanco intends to fund the acquisition with pre-payable debt. Elanco expects to extend its leverage objective of under three times net leverage to Adjusted EBITDA by three months, from the end of 2023 to the end of the first quarter of 2024.
- Elanco expects to unlock upside to its long-term growth algorithm, with the potential to add a full percentage point of consistent annual revenue growth, starting in 2024, and further expand the company's margin potential over time. Transaction and operating costs will be slightly dilutive to Elanco's reported and adjusted earnings per share in 2021, with the impact expected to be concentrated in the fourth quarter, and also slightly dilutive to the full year 2022.
- ELAN reaffirms guidance for Q2 (Jun), sees Q2 (Jun) revs of $1.225-1.255 bln vs. $1.24 bln S&P Capital IQ Consensus.
- ELAN reaffirms guidance for FY21 (Dec), sees FY21 (Dec) revs of $4.67-4.71 bln vs. $4.7 bln S&P Capital IQ Consensus.
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