Eli Lilly and Company (NYSE:LLY) announced the split-off of remaining 80.2% stake in Elanco Animal Health Incorporated (NYSE:ELAN) on February 8, 2019. In the exchange offer, Eli Lilly and Company shareholders can exchange all, some or none of their shares of Lilly common stock for shares of Elanco common stock owned by Lilly. Shareholders, who exchange all of their shares of Lilly common stock, if the exchange offer is not oversubscribed, will no longer have any ownership interest in Lilly but will instead directly own only an interest in Elanco. If the exchange offer were undersubscribed, Lilly would exchange less than 293.29 million shares of Elanco common stock. In that case, Lilly would continue to own an interest in Elanco and, depending on the number of shares of Elanco common stock distributed in the exchange offer, Lilly could retain voting control of Elanco with respect to, among other things, the election of Directors. If Lilly continues to own an interest in Elanco after the exchange offer, Lilly intends to conduct additional exchange offers or declare and pay a special dividend of Elanco common stock to all Lilly shareholders to complete the disposition of its Elanco shares. The final exchange ratio, reflecting the number of shares of Elanco common stock that tendering shareholders will receive for each share of Lilly common stock accepted in the exchange offer, will be announced by press release on the trading day immediately preceding the expiration date of the exchange offer. The number of shares Lilly shareholders can receive is, however, subject to an upper limit of 4.5262 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. The exchange offer is expected to launch on February 8, 2019 and to remain open for a period of at least 20 business days. Unless the exchange offer is extended or terminated by Lilly, the exchange offer will expire on March 8, 2019.

It is expected that additional independent directors will be appointed following the completion of the Exchange Offer and that certain directors who are officers or employees of Lilly will resign while certain of Lilly's officers or employees may continue to serve on Elanco's Board for a period of time following the completion of the exchange offer. The transaction is subject to conditions including that at least 146.6 million shares representing 50% of the total stake of Elanco common stock will be distributed in exchange for shares of Lilly common stock that are validly tendered in the exchange offer, no material adverse change occurring related to Elanco or Lilly, the registration statement on Form S-4 shall not have become effective prior to the expiration date of the exchange offer and the receipt by Lilly of the opinion of its tax counsel. Computershare Trust Company, NA acted as transfer agent to Elanco. Eric Sensenbrenner of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to Eli Lilly and Company.

Eli Lilly and Company (NYSE:LLY) completed the split-off of 80.2% stake in Elanco Animal Health Incorporated (NYSE:ELAN) on March 11, 2019. The exchange offer was 7.6 times oversubscribed. Under the terms of the exchange offer, Lilly shareholders received 4.5121 shares of Elanco common stock for each share of Lilly common stock accepted in the exchange offer. Lilly accepted 65 million shares of Lilly common stock from its shareholders in exchange for the 293.29 million shares of Elanco common stock that it owned. As a result, Lilly no longer owns any voting or economic interest in Elanco's common stock. Carl L. McMillian, David A. Ricks, Aarti S. Shah and Joshua L. Smiley each resigned from Elanco's Board of Directors, whereas effective March 11, 2019, John P. Bilbrey, Deborah T. Kochevar, Kirk McDonald and Denise Scots-Knight have been appointed as new Directors in Elanco. R. David Hoover remains as Chairman of the Board of Directors of Elanco. Other remaining Board members include Jeffrey N. Simmons, President and Chief Executive Officer of Elanco, Kapila Kapur Anand and Lawrence Kurzius.