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Elanco to purchase Posilac Dairy Business

00:00AM Aug 20, 2008
            Elanco, a division of Eli Lilly and Company, announced this morning it has signed an agreement to purchase Posilac Dairy Business from Monsanto.
            Lilly will acquire all rights to the Posilac brand, its U.S. sales force and its manufacturing facility in Augusta, Ga. Monsanto will "receive a $300 million upfront payment, as well as contingent consideration,” according to a press release issued this morning. The transaction is expected to close in October, following anti-trust clearances.
            Elanco is no stranger to BST, since it has had exclusive sales rights outside of the United States for a decade. "With our rich history and experience in the dairy industry, Elanco is the ideal steward of this vital technology,” says Jeff Simmons, Elanco president.
            "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,” he says.
            In a conference call with dairy media this afternoon, Simmons says commitment, sustainability and safety were all drivers for Elance to purchase the Posilac business. Simmons says food needs will increase 40% to 50% over the next 40 to 50 years globally, and 70% of that increased food will have to come from innovation. "We've chosen this business, so we need to stand up for the 70% of increase food demand that must come from innovation. If we don't believe in those things, do we really have a vision and a strategy as a company," he says.
           One of the keys of moving forward with Posilac will be to listen to stakeholder groups: producers, processors and consumers. "We will not go around our producers and processors without being aligned with them," he says. 
          "We will very engaged with key stakeholder groups. By working with them, we want to understand where they are at, and then address concerns proactively," says Dennis Erpelding, Elanco's global manager for government relations, public affairs and communications. 
          Neither Simmons or Erpelding were prepared to address how Posilac will be marketed or priced in the future. But Simmons says the company will be able to offer dairy producers a portfolio of products with the expertise to provide technical assistance when needed. 
         The market reacted a bit negatively to the news. At 3 p.m. EDT, Elanco stock was down 54 cents, or 1.13%. Monsanto stock had jumped $5.26, or 4.66% The Dow was up 0.28% overall.