Germany's Bayer sells Animal Health unit to Elanco - report

Elanco Animal Health said on Tuesday it would buy Bayer's veterinary drugs unit in a cash and stock deal valued at $7.6 billion, creating the second largest animal health business and expanding Elanco's reach in the pet e-commerce space. The animal health market has seen Pfizer Inc and Eli Lilly and Co successfully floating their veterinary medicine units on the stock market as independent entities.

Bayer would receive $5.3 billion in cash and $2.3 billion worth of Elanco stock based on the unaffected 30-day average price as of Aug. 6 and subject to a 7.5% symmetrical collar. The price tag represents an implied multiple of 18.8 times adjusted core earnings, Bayer added.

Both the companies had been in talks over the possible deal that would be number two after industry leader Zoetis and ahead of unlisted Boehringer Ingelheim - which bought animal health assets from Sanofi - and drugmaker Merck & Co.