Elanco Animal Health Announces $245M Stock-For-Stock Acquisition Of Aratana Therapeutics

Elanco Animal Health Inc ELAN announced Friday that it has struck a deal to buy pet therapeutics company Aratana Therapeutics Inc PETX. The two companies are partners on the canine drug Galliprant.

What Happened

The stock-for-stock deal is worth as much as $245 million, Elanco said. A cash contingent value right of 25 cents per share will be granted to Aratana shareholders on the closing date if the drug capromorelin, known by the brand name Entyce, achieves a set sales target prior to the end of 2021, Elanco said. 

The deal would grant Aratana shareholders 0.1481 Elanco shares and one cash contingent value right for each Aratana share, and the shares to be issued represent about 2 percent of outstanding Elanco shares.

The deal implies a value of $4.75 per Aratana share, or a premium of approximately 40 percent. The  

Elanco said it has also signed a development and commercialization agreement with VetDC for Tanovea-CA1, the first canine lymphoma treatment conditionally approved by the FDA. 

Why It's Important

Elanco has supported Aratana since its inception and said it was an investor in Cultivan, a venture capital fund that participated in Aratana's early financing round. 

The partnership on the drug Galliprant was struck in 2016, and the deal announced Friday "would allow Elanco to capture the full value of this important, growing product," Elanco said. 

Aratana brings two other products to Elanco: Entyce, which is the only FDA-approved veterinary therapeutic to stimulate canine appetite, and Nocita, a long-lasting local anesthetic. 

What's Next

Elanco also announced Friday that it's forming a commercial team dedicated to the veterinary specialty business. If the acquisition of Aratana is approved, the acquired company's field force would transition into the new team, Elanco said. 

The purchase is expected to close midyear and is subject to customary closing conditions, including approval by Aratana shareholders and antitrust clearance, Elanco said. The deal was unanimously approved by Aratana's board. 

Elanco shares were trading down 1.1 percent at the time of publication, while Aratana shares were rallying by 37.32 percent. 

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