Eli Lilly’s Elanco to buy Germany’s Lohmann Animal Health

Elanco, the animal health division of US pharmaceutical giant Eli Lilly and Co, yesterday struck a deal to buy Germany's privately-held Lohmann Animal Health, the poultry vaccine and feed additives unit of PHW Group.

Elanco did not disclose the financial terms of the deal, but media reports had said late last year  that Lohmann Animal Health was valued at about €400 million ($535 million).

Under the terms of the agreement, Elanco will acquire all assets of Lohmann SE and its subsidiary, Lohmann Animal Health.

These assets include a range of vaccines and feed additives, commercial capabilities, and manufacturing sites in Cuxhaven, Germanyand Winslow, Maine.

The transaction is expected to close in the second quarter of 2014.

PHW Group, Germany's biggest poultry farmer, had in August 2013 hired Commerzbank AG to manage a potential sale of its avian-vaccine and feed-additive unit so that the family-owned company could focus on its animal nutrition unit and Wiesenhof poultry food business, which together account for 80 per cent of its €2.3 billion annual sales.

Reuters had then reported that Boehringer Ingelheim, among the world's top 20 pharmaceutical companies, is close to making an offer. It also said that private equity firms such as Permira are also in the race. (See: Boehringer Ingelheim in the race to buy Lohmann Animal Health)

Lohmann Animal Health is one of the world's leading suppliers of avian vaccines and feed additives. It has a range of innovative vaccines for poultry, such as the world's first oral vaccine against chicken infectious anaemia and highly-effective live vaccines against salmonella.

It also produces a range of feed additives and premixes in its own state-of-the-art facilities in Cuxhaven.

With around 650 employees in more than 30 countries, and production facilities in Germany and the US, Lohmann had sales of €256 million last year.

Elanco develops and markets products and services to improve animal health and protein production in more than 75 countries.

The Indiana-based company employs more than 3,000 people worldwide, and has offices in more than 40 countries.

"The addition of Lohmann Animal Health provides a unique opportunity for Elanco to expand our presence in the global poultry market and to enter the global poultry vaccine market with a solid base, established products, and global commercial and manufacturing capabilities," said Jeff Simmons, senior VP of Eli Lilly and president of Elanco.

"This acquisition will support further pipeline growth and build on Elanco's proven track record for successfully delivering new innovation and integrating acquisitions. We will continue to seek opportunities that support those efforts," Simmons added.

"As the middle class grows in size and affluence throughout the world, the demand for eggs and poultry is growing rapidly. However, egg layer productivity is now shrinking after decades of increases," said William Weldon, VP of Elanco R&D.