Lilly buys dairy hormone unit for $300M

August 20, 2008
Elanco, a division of Eli Lilly and Co., will spend $300 million and an undisclosed "contingent consideration" to buy all rights to a popular dairy cow hormone and its sales and manufacturing operations from St. Louis-based Monsanto Co.

Elanco has been selling the supplement, called Posilac, outside the United States for a decade. Now Elanco will employ Monsanto's U.S. sales force and own the Posilac factory in Augusta, Ga.

Posilac, the trade name for bovine somatotropin, is widely fed to cows, boosting milk production upward of 10 percent. The naturally occurring hormone is produced through genetic engineering.

"Global dairy demand is increasing, outstripping supply, and consumers are seeing rapidly rising prices," Elanco President Jeff Simmons said in a statement. "With the purchase of Posilac, Elanco can enhance its overall product portfolio and work together with the industry to provide dairy farmers more options and give consumers affordable choices."

The transaction is expected to close in the fourth quarter, pending approval by federal trade authorities. Indianapolis-based Lilly said the acquisition would not alter its 2008 profit forecast.

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