Eli Lilly and company has signed an agreement to acquire Ivy Animal Health Inc., a privately held applied research and pharmaceutical product development company focused on the animal health industry. Upon deal closing, Ivy will become a wholly owned subsidiary of Lilly and will be an operating unit of Lilly's Elanco Animal Health division. Ivy will continue to operate from its current location in Overland Park, Kansas. Ivy is organized into four divisions, including Ivy Laboratories, VetLife, Ivy Natural Solutions and AgSpan.

The transaction is expected to close near the end of the second quarter of 2007, contingent upon clearance under the Hart-Scott-Rodino anti-trust improvements act and other customary closing conditions. Financial terms of the deal were not disclosed. At closing, Lilly would expect the acquisition to result in a charge to earnings primarily for acquired in-process research and development. The amount of the charge has not yet been determined, but is expected to be in the range of $0.01 to $0.04 per share. The impact to second quarter and full-year 2007 earnings per share guidance has not yet been determined.

Jeffrey Simmons, Elanco's executive director of global strategy, research and development and operations, commented, "The acquisition of Ivy Animal Health offers a number of strategic opportunities for Elanco, including VetLife's current differentiated implant product line, Ivy natural solutions' current and future products and services, and AgSpan's benchmark knowledge services. Our product lines are complimentary, and together they deliver cumulative value to our beef-producing customers."

Richard Shuler, who will continue to serve as president of Ivy Animal Health, said, "Ivy and Elanco have been domestic and international business partners for the past ten years. A decade of global partnering has now been formalized by this acquisition. This is a synergistic partnership that is beneficial to both parties and, more importantly, to the global animal stakeholders we serve."

BMO Capital Markets acted as exclusive financial advisor to Ivy Animal Health in this transaction. Lilly did not utilize an external financial advisor.