One year after first announcing its intentions to acquire the animal health assets from Germany-based Bayer AG, Greenfield-based Elanco Animal Health Inc. (NYSE: ELAN) has closed the deal valued at $6.9 billion.

The stock and cash deal raises Elanco’s profile in the all-important pet business and makes it the second-largest animal-health company in terms of global revenue behind New Jersey-based Zoetis Inc. (NYSE: ZTS).

Elanco says the transaction is funded by $5.17 billion in cash and 72.9 million shares of common Elanco stock to Bayer.  The stock closed Friday at $23.63 per share.

In an interview with Inside INdiana Business, Elanco President and Chief Executive Officer Jeff Simmons said the purchase positions the company for the long term as a leader in the animal health industry.

“I think the exciting thing is everyone hasn’t lost sight of the vision. Our goal is to create an independent company focused on animals to create value for farmers, veterinarians, pet owners, and that vision has been in front of the Bayer organization and Elanco people for the last year.”

Simmons said in the nearly two years since it became an independent company, having separated from Indianapolis-based Eli Lilly and Co. (NYSE: LLY) in September 2018, Elanco has become a purpose-driven, independent global company dedicated to animal health “all while weathering the century’s most significant animal and human health pandemics: African Swine Fever and COVID-19.”

One of the last obstacles was removed in early July when the Federal Trade Commission approved the acquisition. Elanco satisfied some regulatory concerns by divesting of a few additional properties. Elanco said the divested products had 2019 revenue in the range of $120 million to $140 million, a small percentage of the multi-billion-dollar company.

Still, it is unclear if or when layoffs would occur because of duplicated positions between the two firms.

“Here in the early stages of this, we’’ll begin to put our pipelines together and look more closely. With antitrust, we’ve had some limitations, so (now) we’ll be able to look at truly where the complements are, where the synergies are, and then we’ll begin to work through those decisions,” said Simmons.

Elanco says its global food animal products felt the majority of the impact of the pandemic as processing plant closures, reduced foodservice demand, and economic pressure on livestock producers. But the diversification via the Bayer acquisition better prepares Elanco to weather economic storms.

“It balances us now, gives us a lot more pet business combined with our livestock so now there’s a good balance,” said Simmons.

Last year, about one-third of Elanco’s sales of roughly $3 billion came from companion-animal products, primarily dogs and cats. With the Bayer assets, about half of Elanco’s sales will be linked to that side of the business.

“COVID has shown the importance of that pet business, becoming more and more important in animal health. It allows us to have not only a vet-centered business in pet health but retail, so Chewy and Amazon,” said Simmons. “That trend has been catalyzed and accelerated with COVID as people want to get their products at the door of their homes.”

According to data from the American Pet Products Association, Americans will spend $99 billion dollars in 2020 on pet food, supplies, over-the-counter medicines, and veterinary care. That is $4 billion more than 2019 and $10 billion above 2018 spending levels.

The AAPA said 67% of U.S. households own a pet, which equates to 84.9 million homes.

While companion pets now make up a larger share of Elanco business, animal agriculture is still a critical part of the company’s bottom line. The company says complementary farm animal portfolios position Elanco to serve an even broader spectrum of the industry and better leverage data, and services for customers. The transaction adds a number of signature cattle brands, and enhances the company’s global bio-protection portfolio.

“This milestone is another key step in Elanco’s journey. But, ultimately, today is about improving the lives of animals, people and improving the health of the planet. Pets and protein have never been more important,” Simmons said. “The animal protein sector, COVID highlighted the importance as meat cases were empty. Meat, milk, eggs and fish, the ability for us to globalize that business significantly.”

Elanco President and Chief Executive Officer Jeff Simmons tells Inside INdiana Business how the deal strengthens the company.

Simmons highlights Elanco’s deep roots in Indiana.