Kindred Biosciences to merge with Elanco Animal Health

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 16, 2021
  • Elanco Animal Health will acquire Kindred Biosciences for about $440 million.
  • The $9.25 per share agreement is expected to close in the third quarter.
  • The deal brings 3 potential dermatology blockbusters under Elanco's umbrella.

Elanco Animal Health Inc (NYSE: ELAN) said on Wednesday it will acquire Kindred Biosciences Inc (NASDAQ: KIN) for roughly $440 million (£312 million) to expand its footprint in the pet health industry. The acquisition will bring three potential dermatology blockbusters, which are currently in the development phase, under Elanco’s umbrella.

Elanco opened more than 2% up in the stock market on Wednesday and gained another 1% in the next hour to trade at $36 per share. This compares to its year-to-date low of $27.85 per share in the last week of March.

The agreement translates to $9.25 per share

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As part of the agreement, Kindred shareholders will receive $9.25 per share that represents a 52% premium on the biopharmaceutical company’s 30-day average closing price. The announcement fuelled a massive 45% growth in Kindred’s stock on Wednesday morning. According to CEO Richard Chin of Kindred Biosciences:

“From the beginning, we have been focused at KindredBio on bringing the best medicines to our animal family members. With this transaction with Elanco, a widely respected leader in veterinary medicine with global reach, we will maximize the impact our innovative pipeline will have on improving the lives of pets.”

Elanco picked Goldman Sachs as its financial advisor and Covington & Burling LLP as its legal counsel for the acquisition. Kindred Biosciences, on the other hand, chose Barclays as financial advisor and Morrison & Foerster LLP as legal counsel.

In separate news, eBay said on Wednesday it will sell its South Korean unit to Shinsegae Group’s E-Mart Inc and Naver for $3.6 billion.

Elanco’s Aaron Schacht’s comments on the acquisition

Commenting on the acquisition, Elanco’s Aaron Schacht (executive vice president of innovation, regulatory and business development) said:

“Kindred Biosciences’ monoclonal antibody pipeline and capabilities are additive and complementary to what we’ve built within Elanco. This combination will bolster our opportunity for leadership in atopic dermatitis and allow us to deliver innovation of novel biologic therapeutics to treat other unmet disease challenges in pets.”

According to Elanco, the transaction is expected to complete in the third quarter. It will weigh only slightly on its adjusted EPS in 2021 and 2022. In 2024, the acquisition will increase its annual revenue by a full percentage point.

The American pharmaceutical company reiterated its outlook for Q2 and the full financial year on Wednesday. It forecasts up to $1.255 billion of revenue in Q2 and up to $4.710 billion for the year as a whole.

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