Elanco finalizes sale of aquaculture business

Elanco Animal Health Inc. has completed the sale of its aquaculture business to Merck Animal Health for approximately $1.3 billion in cash, with net proceeds of approximately $1.05 billion to $1.1 billion available for debt repayment in the third quarter of 2024.

Elanco’s plan to sell its aquaculture business was announced in February.

“The completion of this transaction represents an important milestone in our continued focus on high-value opportunities in pet health and livestock sustainability while creating balance sheet flexibility. Elanco’s positive trajectory, demonstrated by three consecutive quarters of underlying revenue growth, project progress and our ability to reduce debt, strengthens our value proposition,” said Todd Young, executive vice president and chief financial officer. Elanco Animal Health. “The proceeds from this transaction, combined with increased free cash flow from our operations, accelerates our deleveraging and positions us to deliver significant value over time.”

The successful completion of this transaction enables the Company to repay its term loan debt on a pro-rata basis pursuant to the terms of the Company’s credit agreements. Combined with an expected $280 million to $320 million of cash generated from core operations, the Company expects to repay approximately $1.3 billion to $1.4 billion of debt in 2024, ending the year with net debt to adjusted EBITDA in the mid-4x range. Net debt to adjusted EBITDA is expected to improve further in 2025 to the high 3x to low 4x range. The Company will provide additional information on the impact of the transaction on its 2024 financial outlook during its second quarter earnings conference call in August.