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Kindred Biosciences Stock Jumps On $440M Elanco Animal Buyout Deal

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  • Elanco Animal Health Incorporated (NYSE: ELAN) has agreed to acquire Kindred Biosciences Inc (NASDAQ: KIN) for $9.25 per share, or approximately $440 million.

  • The price represents a premium of 52% based on the 30-day average.

  • Elanco will fund the acquisition with pre-payable debt and expects to extend its leverage objective of under three times net leverage to Adjusted EBITDA by three months, from the end of 2023 to the end of Q1 of 2024.

  • KindredBio brings three potential dermatology products expected to launch through 2025 and several additional R&D programs.

  • The combination will add approximately $100 million to Elanco's previously stated innovation revenue expectation of $500 million to $600 million by 2025, with significant opportunity beyond the period.

  • The acquisition agreement builds on Elanco's existing relationship with KindredBio, which began with licensing the global commercial rights of KindredBio's late-stage treatment for canine parvovirus.

  • Transaction and operating costs will be slightly dilutive to Elanco's reported and adjusted EPS in 2021. The impact is expected to be concentrated in the fourth quarter and slightly dilutive to the full year 2022.

  • Elanco also reaffirmed the second quarter 2021 revenue guidance of $1,225 million to $1,255 million and full-year 2021 revenue guidance of $4,670 million to $4,710 million.

  • Elanco will host a conference call today at 8:00 am E.T.

  • Price Action: KIN shares are up 44.6% at $9.17 during the premarket session on the last check Wednesday, while ELAN shares closed at $34.81 on Tuesday.

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