Elanco Animal Health Incorporated (ELAN) Options

ELAN 10Q 2/26

ELAN new 52 week high

ELAN new 52 week high

* * $ELAN Video Chart 10-07-2020 * *

Link to Video - click here to watch the technical chart video

Barron’s likes post-merger ELAN—but the stock is not a screaming buy (IMO):

https://www.barrons.com/articles/animal-spirits-for-elanco-pet-care-companys-stock-is-well-positioned-for-gains-51599848313 Elanco Animal Health shares are up about 15% since the company closed its nearly $7 billion acquisition of Bayer Animal Health in early August. That rally has been a long time coming for investors in the animal-care company.

Elanco (ticker: ELAN) stock was down about 2% from when it was spun out from Eli Lilly (LLY) two years ago until the Bayer acquisition became official. Now, Elanco has a good opportunity to change the trajectory of its stock performance, in part because it will have more global reach with the Bayer unit in the fold. The acquisition catapults Elanco into the No. 2 spot in animal-health market share, behind Zoetis (ZTS)…

Companion animal, or pet, products, including canine treatments for heartworm and osteoarthritis, are for the most part faster-growing with higher margins than many livestock products. …A big plus from the Bayer deal: It increases Elanco’s exposure to pet products to 48% of sales from 38%.

…One of the less favorable consequences of the Bayer deal is that Elanco now has a lot of debt on its balance sheet. Risinger estimates that the company’s net debt to 2021 earnings before interest, taxes, depreciation, and amortization is a hefty 5.2 times…

… Elanco fetches about 27 times the $1.02 a share that analysts expect the company to earn next year, a big discount to about 38 times for Zoetis. Elanco probably won’t close that valuation gap soon, considering that Zoetis has better organic sales growth, which excludes acquisitions, and a stronger balance sheet. But it certainly could narrow the gap and give its stock price a nice boost. In other words, ELAN may be a better buy than ZTS, but it’s not exactly cheap.

ELAN prices (upsized) dual offerings to help fund Bayer Animal Health acquisition:

https://www.elanco.com/news/press-releases/elanco-stock-and-pricing-offerings

ELAN acquires Bayer’s animal-health business for $7.6B in cash+stock:

https://finance.yahoo.com/news/1-elanco-buy-bayers-animal-101029292.html Elanco Animal Health Incorporated (ELAN) today announced it has entered into an agreement with Bayer AG to acquire its animal health business in a transaction valued at US$7.6 billion. The transaction, which is subject to regulatory approval and other customary closing conditions, creates the second largest animal health leader [behind ZTS]…

The transaction will double Elanco’s Companion Animal business, advancing the company’s intentional portfolio mix transformation and creating a balance between its Food Animal and Companion Animal segments. Elanco expects the combined organization to continue to deliver mid-single digit revenue growth…

...Elanco will finance the transaction through both cash and equity. Bayer AG will receive $5.32 billion in cash…and $2.28 billion or approximately 68 million Elanco Animal Health common shares. This represents a 70 percent to 30 percent cash-to-equity mix.

Stock received by Bayer is subject to a 7.5 percent symmetrical collar centered on Elanco’s volume-weighted average price for the 30 trading days ended August 6, 2019 of $33.60.

The transaction is expected to close in mid-2020, subject to regulatory approvals and other customary closing conditions. At the midpoint of the collar ($33.30), Bayer would receive an 18% equity stake in ELAN, but Bayer intends to monetize these shares in due course.

With product expansion and mergers closing this stock should ramp up nicely.

ELAN 1Q19 items…

PR:
https://s22.q4cdn.com/229316558/files/doc_financials/2019/2019/q1/Elanco-Q1-Earnings-Press-Release-FINAL.pdf

CC slides:
https://s22.q4cdn.com/229316558/files/doc_financials/2019/q1/Elanco-Q1-2019_Earnings-Call-slides-FINAL.pdf

ELAN acquires PETX in all-stock deal: #msg-148466146.

Barron’s showcases ‘TGDT’ attraction of animal-health stocks:

https://www.barrons.com/articles/the-animal-health-business-is-growing-how-to-invest-in-it-51553906098

The valuations of these stocks are not cheap, however.

OK, thx. Float is 80% short, not sure that fact alone would account for it completely.

A guess: Some people shorted ELAN when tendering their LLY shares in the swap, planning to cover with their newly obtained ELAN shares.

Hi Dew,

Newbie here. Appreciate your painstaking efforts. Do you know why this stock is so heavily shorted. TIA

Fenix

ELAN expands BoD:

https://www.businesswire.com/news/home/20190313005160/en

Exchange ratio for LLY-ELAN swap=4.5121, close to the previously-specified upper limit:

https://www.prnewswire.com/news-releases/lilly-announces-final-exchange-ratio-of-4-5121-for-elanco-exchange-offer-300808178.html

LLY announces tender offer for share swap:

https://www.prnewswire.com/news-releases/lilly-will-initiate-divestiture-of-its-remaining-interest-in-elanco-animal-health-300792222.html The exchange offer is designed to permit Lilly shareholders to exchange their shares of Lilly common stock for shares of Elanco common stock at a 7 percent discount, subject to an upper limit of 4.5262 shares of Elanco common stock per share of Lilly common stock.

If the upper limit is not in effect, for each $100 of shares of Lilly common stock accepted in the exchange offer, tendering shareholders would receive approximately $107.53 of Elanco common stock.

These values will be determined by reference to the simple arithmetic average of the daily volume-weighted average prices of Lilly common stock and Elanco common stock on the New York Stock Exchange during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which would be March 4, March 5, and March 6, 2019, if the exchange offer is not extended or terminated.

Re: ELAN’s pending full separation from LLY

LLY plans to divest its remaining ownership of ELAN via a share-swap tender offer (as PFE did with ZTS). Compared to an outright distribution, the swap offer is beneficial for ELAN insofar as LLY’s ELAN shares end up in the hands of only those investors who want them.

ELAN 4Q18 items…

PR:
https://s22.q4cdn.com/229316558/files/doc_financials/2018/q4/Elanco-2018.12.31-Press-Release-FINAL.pdf

CC slides:
https://s22.q4cdn.com/229316558/files/doc_financials/2018/q4/Elanco-2019.02.06-Call-slides-FINAL.pdf

ELAN’s closest publicly traded facsimile is ZTS, the animal-health spin-off from PFE, whose share price is up 243% from its Jan 2013 IPO (#msg-84067350).

(From 9/19/18)—Elanco—LLY’s animal-health subsidiary—IPOs 72.3M shares @$24.00:

https://www.elanco.com/news/press-releases/elanco-announces-pricing-of-initial-public-offering

https://finance.yahoo.com/news/lillys-elanco-animal-health-units-213854965.html

ELAN’s market cap at the IPO price is approximately $8.55B.

ELAN derives about 2/3 of sales from drugs for livestock and about 1/3 from drugs for pets. All told, ELAN ranks #4 in the worldwide animal-health industry.

The stock begins trading under the symbol, ELAN tomorrow (9/20/18).

lol this is huge vol. look at the average vol. of 14,000.

Why is the volume so low?

Seems almost too good to be true

no brainier here!

thats what I gather as well. should be a no brainer right

So the shares are worth 65cents, is that right?

$$$$$$$$$$$

yipes, time to move onski

shhh-it's our little profit centre, for now...

nice action here...

no reason the huge loss; put me in for a few at 0.42