US pharmaceutical company Merck has acquired digital livestock and animal health tech company Antelliq Group for €2.1 billion ($2.37 billion).
Antelliq manufactures sensors for animals, including ear tags for dairy cows through a product called Allflex that can monitor cows’ activity and provide traceability.
Merck acquired Antelliq from private equity firm BC Partners, who held a controlling stake in the company, Canadian pension plan PSP Investments and other smaller shareholders.
Antelliq says its Allflex technology can identify, collect, and analyse animal data about feed conversion and breeding efficiency, respiratory and digestive diseases, environmental stress, and parturition distress.
Antelliq’s products bought in €360 million euros in sales in the year to September 30th 2018. Antelliq will operate as a separately managed subsidiary within Merck but highlights the pharmaceutical company’s commitment to the animal health business, according to Reuters. This is in contrast to Merck’s competitors who divested from their animal health businesses in recent years: Pfizer’s Zoetis raised $2.2 billion in a 2013 IPO, while Lilly’s Elanco raised $1.51 billion from an IPO in September.
Reuters reports that “Merck’s Chief Executive Officer Kenneth Frazier had said in October that the company was a “good owner” of its animal health unit. “We believe that we run this business very well inside the company compared to our competitors,” he had said.”
Yasir Khokar, CEO of dairy livestock data analytics startup Connecterra, which also collects and analyzes data about animal health, welcomed the news as a sign of the vast potential for this segment of agtech.
“With a billion people associated with the dairy industry, this acquisition highlights the massive opportunity for agtech startups. Antelliq’s hardware and sensor technologies have been in the industry for years and as Monsanto’s acquisition of the Climate Corporation a few years ago paved the way for arable farming exits, this deal could do the same for the livestock sector. However, it is our belief at Connecterra that the true value, yet to be seen in exits, will be unlocked by innovations from the data and analytics space.”
According to TechAccel founder, president, and CEO Michael Helmstetter, a strategic acquisition of this magnitude sends a major message about the animal health digital space.
“Merck’s positioning in using technology and smart data for animal identification and well-being further validates the growth and potential of animal intelligence technologies for both companion and food animals. The continued, accelerating trend of significant M&A Animal Health deals is very encouraging for those of us who are focused on investing in and advancing innovation for disease prediction, monitoring, and treatment.”
Rob Leclerc, CEO of AgFunder, thinks attention in agtech will rightfully turn towards livestock tech.
“Since the Climate Corp acquisition, most of the attention has been focused on precision ag for row crops and there’s been very little investor appetite for precision livestock and this seemed like an enormous untapped market. We invested in Connecterra because we felt that if there was going to be a winner in the digital animal health it would be them, so it’s great to see some market validation here given that this is probably the single biggest acquisition of a digital agtech company. Even though Antelliq wasn’t exactly a startup having developed their solution in the mid-90s, it can help the market see the potential.”
Merck’s CEO Ken Frazier said the acquisition will “complement” the company’s animal health offering “by adding market-leading digital products, extending the range of solutions we can provide our customers and further driving the growth of our business.”
“This acquisition is well aligned with our strategy to generate long-term growth and sustainable value for our customers and shareholders.”