Elanco, the animal health division of Eli Lilly & Co., announced Wednesday morning that Lilly has signed an agreement with Monsanto Co. to acquire Monsanto's Posilac dairy cow supplement for $300 million.
"Dairy demand is increasing worldwide and is exceeding supply, while milk and other dairy product prices to consumers are rising," Elanco president Jeff Simmons said. "With Posilac, Elanco not only can enhance its portfolio but can work with dairy producers to provide them with more production options that will give consumers more affordable choices.".
Elanco has marketed a generic form of Posilac outside the U.S. for more than 10 years, and the acquisition will give it exclusive rights to the U.S. market.
"We're pleased Elanco is acquiring this business and will continue to provide dairy farmers with this important production tool," said Carl Casale, Monsanto's Executive Vice-President of Strategy and Operations. "Elanco is fully focused on animal health and productivity and is committed to the importance of Posilac in both the domestic and the international marketplace."
According to the agreement, Lilly will acquire the Posilac brand, its manufacturing plant in Augusta, Ga., and its U.S. workforce. The acquisition is subject to customary regulatory clearance but is expected to be completed by the beginning of the fourth quarter, according to the announcement.
The announcement said the deal also includes a "contingent consideration," which normally involves additional compensation based on the product's performance.
Monsanto announced two weeks ago that it was selling Posilac to focus on its core platform in corn, soybean, cotton and vegetable plant seeds.