Elanco Animal Health talks $550 million three-year tangible equity units with 5% yield, up 20%

By Abigail W. Adams

Portland, Me., Jan. 21 – Elanco Animal Health Inc. plans to price $550 million, or 11 million, three-year par of $50 tangible equity units after the market close on Wednesday with price talk for a fixed dividend of 5% and a fixed threshold appreciation premium of 20%, according to a market source.

Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the joint bookrunners for the registered offering.

BofA Securities Inc., Barclays, BNP Paribas Securities Corp., Mizuho Securities USA Inc., MUFG, Evercore ISI and Stifel, Nicolaus & Co. Inc. are also bookrunners.

The equity units are composed of a prepaid stock purchase contract and a senior amortizing note.

The stock purchase contracts are callable on or after Nov. 1, 2020 at the maximum settlement rate. They are putable upon a fundamental change.

The equity units are pricing concurrently with a common stock offering of 19,159,866 shares. The common stock offering carries a greenshoe of 1,915,987.

Net proceeds from the equity units are expected to be $528.1 million. Proceeds will be used to fund a portion of the previously announced acquisition of Bayer AG’s animal health business.

If the acquisition is not completed, proceeds will be used for general corporate purposes.

Elanco Animal Health is a Greenfield, Ind.-based global animal health company.

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