Merck shells out $2.4B for cutting-edge animal tech company Antelliq

Antelliq's Animo division sells a digital gadget that tracks dogs' activity, sleep and behavior. (Antelliq/Animo)

Bayer may be getting out of the animal health business, but Merck & Co. is plowing ahead—and in a new market to boot. The pharma giant is scooping up Antelliq, a company that specializes in digital ID and tracking for livestock and pets, in a deal worth €3.25 billion.

Merck will put down €2.1 billion in cash, or about $2.4 billion, and assume €1.15 billion in debt to grab Antelliq's tracking technology, a business that will complement its offerings in the drug, vaccines and tech departments, CEO Ken Frazier said. The microchip IDs that pet owners know well are just part of the business, too; Antelliq's technology helps farmers track their livestock along their path to market.

It's the fastest-growing piece of the animal health market, Merck said in its Friday statement. And the privately held, France-based Antelliq brought in about €360 million in sales over the 12 months ended Sept. 30, a figure Merck can likely pump up through its network of connections with veterinarians and other suppliers. Consumer products—such as Fitbit-type activity trackers for dogs, microchip-controlled cat doors and feeding systems—are part of the mix, too.

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The deal comes on the heels of Bayer's announcing it will hive off its animal health unit as part of a restructuring to focus in on its pharma business. It follows Eli Lilly's exit from the field earlier this year in the form of a $1.5 billion IPO for its animal health unit, Elanco. Sanofi recently bailed out of animal health, too, by trading away that business to Boehringer Ingelheim in exchange for the latter's consumer health unit. Boehringer is now pledging to invest $380 million in animal health while cutting jobs elsewhere in the company.

Digital tracking and management technology is becoming more important, particularly in the livestock business, as consumers around the world increase their consumption of animal protein and food safety scares regularly crop up on the news. The FDA just recently announced plans to identify the sources of tainted food implicated in recalls, which will require tracking foodstuffs through the supply chain.

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Tracking also helps farmers zero in on illness within their own operations. "Identification and monitoring technologies will help optimize disease prediction and treatment," the company said in its statement, "and this acquisition will provide Merck Animal Health with a large, established customer base in both areas."

Obviously, Merck will be able to supply both needs: the technology to manage disease and the drugs to treat it when necessary. Antelliq will add "market-leading digital products, extending the range of solutions we can provide our customers and further driving the growth of our business,” Frazier said.

Plus, raising more animals for human consumption uses resources, and Antelliq's tracking systems are also designed to make sure they're properly fed—from pregnant cows to those fed up for slaughter—in the most efficient way possible.

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