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Lilly's Elanco Animal Health unit could raise $1.45B in IPO proceeds

Eli Lilly and Co. set the terms for its IPO of unit Elanco Animal Health Inc., which could raise $1.45 billion in proceeds at the midpoint of its price range, excluding options.

The company plans to offer 62,900,000 common shares at between $20 and $23 per share and has granted the underwriters a 30-day option to purchase 9,435,000 additional shares at the offering price.

Elanco Animal Health's stock will be listed on the New York Stock Exchange under the ticker ELAN.

The animal food products maker intends to use the net proceeds from the IPO, along with the proceeds from a recent debt offering, for working capital and general corporate purposes.

Following the closure of the IPO, Lilly will retain about 82.3% of Elanco, and if the underwriters fully exercise the overallotment option, Lilly's stake will be reduced to about 80.2%

Goldman Sachs & Co. LLC, J.P. Morgan, and Morgan Stanley will act as the joint book-running managers for the proposed IPO.

Elanco, which ranks among the top five animal health companies in the U.S., was hit by declining sales during 2017, and was put under a strategic review in late 2017 after the clean-food movement, a consumer trend that stressed produce free of antibiotics and hormones, limited the unit's market access.

Lilly decided to spin off the unit via an IPO to maintain focus on its human pharmaceutical business.