GREENFIELD, Ind. — Elanco Animal Health announced Aug. 20 it has agreed to purchase Bayer AG’s animal health business and fold it into its companion animal business. According to Elanco, it will become the second-largest animal health company as a result.

The acquisition is valued at $7.6 billion. Bayer will receive $5.32 billion in cash payment and the remaining $2.28 billion in Elanco’s stock, which amounts to approximately 68 million common shares.

“Joining Elanco and Bayer Animal Health strengthens and accelerates our IPP [Innovation, Portfolio and Productivity] strategy, transforms our portfolio with the addition of well-known pet brands, brings an increased presence in key emerging markets, expands innovation, and accelerates our margin expansion journey,” said Jeffrey N. Simmons, president and CEO of Elanco. “The move combines our long-standing focus on the veterinarian while meeting pet owners’ changing expectation of pet care and access to products.”

Elanco said it expects the merger to drive mid-single digit growth in revenue, double-digit EBIDTA margin growth and acceleration of adjusted gross margin goals.

Werner Baumann, CEO of Bayer AG, added, “Our animal health business is among the pioneers of this sector, having built up an attractive portfolio and secured well-established market positions in the companion and farm animal segments. And now, the combination with Elanco will give rise to a leading competitor in the animal health industry, benefiting customers, employees and shareholders alike.”

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