USA – Phibro Animal Health Corporation has acquired Zoetis Inc.’s medicated feed additive (MFA) product portfolio in a deal valued at US$350 million. 

This acquisition, which is targeted for completion in the second half of 2024, marks a significant shift in both companies’ trajectories within the production animal health sector.

The transaction encompasses over 37 product lines that generated approximately $400 million in revenue for Zoetis in 2023, sold across 80 countries. 

Additionally, six manufacturing sites, strategically located in the U.S., Italy, and China, will transition to Phibro Animal Health, welcoming over 300 Zoetis employees involved in manufacturing, distribution, and commercial activities.

For Zoetis, this divestiture underscores a strategic realignment of its capital allocation strategy, enabling a concentrated focus on other critical areas within animal health, including vaccine, biological, and genetic programs. 

Kristin Peck, Zoetis’s Chief Executive Officer, emphasized the long-term value expected to be realized under Phibro Animal Health’s stewardship, citing the latter’s extensive global reach and robust customer relationships.

Conversely, Phibro Animal Health sees this acquisition as a means to bolster its global presence and enhance its portfolio’s depth and breadth. 

Jack C. Bendheim, Chairman, President, and CEO of Phibro Animal Health, expressed confidence in the company’s ability to integrate and strengthen Zoetis’ MFA portfolio, underscoring the synergistic potential to deliver greater value to customers and shareholders alike. 

Moreover, this strategic move aligns with Phibro’s broader growth strategy, allowing for continued investment in higher-growth segments such as Nutritional Specialties, Companion Animal, and Vaccines.

Financially, the deal is expected to bolster Phibro Animal Health’s profitability and EBITDA margin, with the acquisition anticipated to be accretive to its Adjusted Earnings Per Share. 

Funding for the acquisition will primarily be sourced from debt, with Phibro Animal Health securing financing commitments from key relationship banks. 

Notably, the company aims to maintain a prudent leverage ratio, targeting net leverage of below 3.0x by the end of its fiscal year in June 2027.

Zoetis and Phibro Animal Health are committed to ensuring a seamless transition for their colleagues and customers, ensuring continuity in the supply of these essential products. 

The agreement represents a mutual commitment to advancing animal health and underscores the industry’s dynamic nature, as companies strategically realign their portfolios to meet evolving market demands.

Guggenheim Securities, LLC, and Wachtell, Lipton, Rosen & Katz are serving as exclusive financial and legal advisors to Zoetis, respectively. 

Conversely, Citi and Kirkland & Ellis LLP provide financial and legal advisory services to Phibro Animal Health. 

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