Elanco completes sale of Aqua Business to Merck Animal Health

Elanco Animal Health (ELAN) announced it has completed the divestiture of its aqua business to Merck Animal Health (MRK) for approximately $1.3B in cash, with approximately $1.05B-$1.1B in net proceeds available for debt paydown in the third quarter of 2024. The successful completion of this transaction enables the company to pay down term loan debt on a pro-rata basis per the terms of the company’s credit agreements. Combined with the expected $280M-$320M of cash generated from the base business, the company expects to pay down approximately $1.3B-$1.4B of debt in 2024, ending the year with net debt to adjusted EBITDA in the mid-4x range. Net debt to adjusted EBITDA is projected to improve further in 2025 to the high-3x to low-4x range. The company will provide additional information about the transaction’s impact on its 2024 financial outlook during the second quarter earnings call in August.