Antelliq will be a wholly owned and separately operated subsidiary within the Merck Animal Health Division. Merck will make a cash payment of approximately €2.1 billion to acquire all outstanding shares of Antelliq and will assume Antelliq’s debt of €1.15 billion, which it intends to repay shortly after the closing of the acquisition.

Antelliq is a leader in digital animal identification, traceability and monitoring solutions, the fastest growing part of the animal health industry, with €360 million in sales in the 12-month period ending 30
September 2018. These solutions help veterinarians, farmers and pet owners gather critical data to improve management, health and wellbeing of livestock and pets. The increasing use of digital technology in animal agriculture is driven by the growing demand for protein, food traceability and food safety. Identification and monitoring technologies will help optimise disease prediction and treatment and this acquisition will provide Merck Animal Health with a large, established customer base in both areas.

The closing of the transaction is subject to clearance by antitrust and competition law authorities and other customary closing conditions and is expected to close in the second quarter of 2019. Merck was represented by Barclays and Centerview Partners and Antelliq was represented by Goldman Sachs International, BCG and Rothschild & Co.

Q&A - Jerome Herve, Boston Consulting Group

Please tell us about your involvement in the deal.

BCG did the VDD (Vendor Due Diligence) for BC Partners and Antelliq. We knew the asset from the previous transaction in 2013 and we were amazed by the digital transformation achieved in five years. The company went from a leader in traditional livestock identification tags (e.g. the plastic tags in cows’ ears), to a fully-fledged data management company. This was enabled by the acquisition of an Israeli startup, and the development deployment of a “big data” smart monitoring system. We, therefore, applied the traditional VDD framework (voice-of-the-market, competitive dynamics, etc) to confirm the strength of the historical business, and conducted a digital sprint with our Digital Ventures division to explore use cases which could demonstrate the monetisation potential of the unique data lake Antelliq has built by monitoring millions of cows. We proved that the company had created the condition for what we call “vertical growth”. This contributed to fierce competition between blue-chip buyers, organised by Rothschild and Goldman Sachs, which concluded with MSD acquiring the company for $3.8b.

How does this deal reflect the future of the M&A scope for 2019?

We believe that 90% of the portfolio companies of PE firms have huge digital potential. We anticipate two types of situations: deals sold at suboptimal multiples (or broken) because of lack of digital maturity, and deals reaching highly attractive valuation multiples like Antelliq, because they have successfully transformed and can demonstrate avenues to super high growth by exploiting their traditional assets (brands, products, customer base etc.) in a digital way.

What challenges arose? How did you navigate them?

The challenge is time: with more time Antelliq could have further developed more innovative use cases and maybe reached even higher valuation. $3.8b is already a great performance for the sellers, and it is wise to leave some nuggets for the buyer. MSD will provide a great platform for Antelliq to pursue this fantastic journey.