Shares of Kindred Biosciences Inc. (KIN) - Get Report soared on Wednesday after the company announced that it was being acquired by Elanco Animal Health Inc. (ELAN) - Get Report for about $440 million.
Elanco will acquire all outstanding stock of Kindred at a price of $9.25 per share, a premium of 52% over Kindred's 30-day price average. Kindred shares jumped 45% to $9.19 in premarket trading Wednesday, while those of Elanco were rising 4% to $36.19.
"This highly complementary combination is focused in one of the most exciting spaces in pet health, and one where we see a strategic imperative to build a differentiated competitive offering," said Elanco CEO Jeff Simmons. "It further accelerates our mix shift into pet health and advances our [Innovation, Portfolio and Productivity] strategy."
Elanco expects the addition of Kindred to add about $100 million to its previously stated annual innovation revenue expectation of between $500 million and $600 million by 2025.
Elanco noted that the acquisition will further accelerate its expansion in the pet health market, which the company calls "attractive." In particular, owning Kindred will advance Elanco's presence in the fast-growing, billion-dollar market of pet dermatology.
"From the beginning, we have been focused at KindredBio on bringing the best medicines to our animal family members. With this transaction with Elanco, a widely respected leader in veterinary medicine with global reach, we will maximize the impact our innovative pipeline will have on improving the lives of pets," said Kindred Bio CEO Richard Chin.
Elanco previously licensed Kindred's global commercial rights for its late-stage treatment for canine parvovirus.