INDIANAPOLIS — Elanco representatives declined to comment on a national news organization’s report that its parent company, Eli Lilly and Co., has attracted several potential buyers interested in taking on the animal-health business.
Bloomberg News reported this week that private equity firms like Bain Capital, Advent International Corp. and Carlyle Group LP are considering bidding on Elanco, according to the Indianapolis Business Journal. The source spoke to Bloomberg News on the condition of anonymity because discussions are at such an early stage, the IBJ reported. Eli Lilly might still choose to keep its Elanco branch or pursue a spinoff, they said.
But the report is the first public update since Eli Lilly announced in October that it was mulling whether to sell Elanco, which employs 6,200 people, including nearly 800 at its Greenfield headquarters in Progress Park located just north of Interstate 70 and west of State Road 9.
Elanco representatives declined to comment.
“We do not comment on market rumors or deal speculation,” Colleen Decker, spokeswoman for Elanco, told the Daily Reporter in an email. “We are still reviewing strategic alternatives for our Elanco Animal Health business and expect to provide an update mid-year …”
Elanco could be valued at $14 billion to $16 billion, according to JPMorgan Chase & Co. estimates from December, the IBJ reported.
If Lilly does sell the business, a private equity buyer might be more prone to leave Elanco as a stand-alone business than would a competitor. Firms in the same field typically seek cost savings in mergers, in part by combining operations and eliminating jobs.
Eli Lilly’s actions mirror those of several health-care companies, who are also reportedly examining options for their animal-health business as they seek to replicate the success of Zoetis Inc., whose shares have almost tripled in value since it separated from New York-based Pfizer Inc. in 2013. For example, Henry Schein Inc., a Melville, New York-based medical supplier for doctors and dentists, said Monday that it will spin off its animal unit after combining it with closely held Vets First Choice.
This week, Lilly said that first-quarter sales at Elanco fell 1 percent year-over-year to $761 million, hit mainly by a decrease in sales to the livestock industry. The company’s products, including drugs that help cattle gain weight and dairy cows produce more milk, have been increasingly at odds with a U.S. consumer focus on organic and unaltered food.
The “clean food movement hit us,” Elanco President Jeff Simmons said in January.
Lilly has grown Elanco rapidly in recent years, striking at least 10 deals since 2007, including the $5.4 billion acquisition of Switzerland-based Novartis AG’s animal-health unit in 2014.
In an interview with Bloomberg TV Tuesday, Lilly CEO David Ricks said the company is more focused on building its own pipeline through bolt-on acquisitions and partnerships than pursuing large-scale dealmaking.
“I wouldn’t be surprised to hear about more types of those combinations, that’s just not where we’re focused today,” Ricks said, discussing Takeda Pharmaceutical Co.’s potential $64 billion deal to buy Shire Plc.
The Indianapolis Business Journal contributed to this report.