Sachem Head takes $1.2 billion position in Elanco, stock price surges

FILE PHOTO: Scott Ferguson, Managing Partner and Portfolio Manager for Sachem Head Capital Management LP, presents during the 2018 Sohn Investment Conference in New York City, U.S., April 23, 2018. REUTERS/Brendan McDermid

BOSTON (Reuters) – Hedge fund Sachem Head Capital Management has built a $1.2 billion stake in Elanco Animal Health Inc ELAN.N and plans to push for changes at the company that makes medicines and vaccinations for pets and livestock, a person familiar with the matter said on Wednesday.

The investment, first reported by Bloomberg, translates into a stake of 9.1% in Elanco which is valued at $14 billion.

Elanco’s stock price climbed as much as 9% on news that Sachem Head, run by Scott Ferguson, plans engage with management to push for improvements.

Ferguson raised cash for the position through a so-called special purpose vehicle over the last months and has experience in investing in animal health after making a bet on Zoetis ZTS.N in 2014.

Elanco and Zoetis are competitors but Elanco has lagged with its shares up only 5.4% from a year ago, while Zoetis’ stock has climbed 27% during the same time.

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