The move affirms the drugmaker’s commitment to the business, which Wall Street analysts have long seen value in separating just as rival drugmakers Eli Lilly and Pfizer did.

Pfizer’s Zoetis raised US$2.2 billion in a 2013 IPO, while Elanco, the former animal health business at Lilly, raised US$1.51 billion from an IPO in September.

Merck CEO 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.

Merck’s unit has been a big player in the animal health segment, bringing in sales of US$3.88 billion in 2017. Zoetis recorded US$5.31 billion in revenue, while Elanco brought Lilly US$3.09 billion in sales the same year.

Merck said Antelliq will be a wholly owned and separately operated subsidiary within its animal health division.

Antelliq has been the brand name since February for the Allflex Group, whose brands include Allflex, SCR, Biomark and Sure Petcare.

Antelliq’s products, which brought in 360 million euros (C$546.3 million) in sales in the year ended Sept. 30, provide veterinarians, farmers and pet owners with digital technology that monitors animals and predicts disease in them.

These products allow access to real-time, actionable information to help improve livestock management and health outcomes, Merck said in a statement.

Merck will assume Antelliq’s debt of 1.15 billion euros (C$1.75 billion), which it intends to repay shortly after the closing of the deal, expected in the second quarter of 2019.

Private equity firm BC Partners currently owns a majority stake in Antelliq.

— Reporting for Reuters by Tamara Mathias in Bangalore.

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Allflex, whose parent firm the Allflex Group rebranded in February under the name Antelliq, announced Aug. 21 it has bought Agrident for an undisclosed sum.

Agrident, set up in 1997 and based at Barsinghausen, about 20 km west of Hanover, makes and sells readers worldwide for farm animal management and traceability systems.

Agrident RFID readers approved by the Canadian Cattle Identification Agency as of last October include the company’s AWR100, AIR100 and AIR200 handheld models and its ASR600 and ASR700 stationary panel readers. Allflex already has six handheld RFID reader models on the CCIA approved list.

Agrident’s fixed and mobile reader systems offer “advanced data capture features for management and traceability” and have “a worldwide reputation for excellence and superior performance,” Allflex said in a release.

“Agrident’s RFID readers and associated technologies are a natural expansion of our smart data products and services, enhancing our capabilities in electronic animal identification and data capture,” Antelliq chief operating officer Brian Bolton said in the same release. — Glacier FarmMedia Network

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The purchase was overseen by PSP’s new team in London, led by Simon Marc, and is likely to be followed by further deals in Europe as PSP looks to increase its presence in Europe’s private equity market after having opened an office in London last year.

“We do have an increased emphasis on Europe,” said Guthrie Stewart, global head of private investments at PSP, which has $112 billion of assets under management.

Stewart said that, although PSP has significant infrastructure investments in the region, operating five airports in Europe and investing in the rail and ports sectors in the U.K., it was under-allocated in the private equity space.

“There’s been a conscious effort to increase our presence in Europe and a key initiative to do that is building out a team in London. That team led this effort together with resources for Montreal,” Stewart said in an interview.

Allflex grew from being a low-tech maker of plastic ear tags for cows to a world leader in high-tech labelling after the European Union tightened food traceability rules in 1998 in the wake of the bovine spongiform encephalopathy (BSE) crisis.

Subsequent crises, including a 2001 foot-and-mouth disease outbreak in Britain, led to tighter supervision of how livestock is sourced and tracked in Europe, North America and Australasia.

“Allflex is a high-quality, fast-growing industry leader with a unique market position,” Stewart said in a release.

The company’s product lines today include radio‐frequency identification (RFID) and visual ear tags, tissue sampling devices, RFID implants, monitoring devices, milk meters and other farm equipment.

Electronic animal identification is increasingly regulated, which makes it harder for new players to start a business from scratch, leaving established operators such as Allflex with strong growth prospects.

BC Partners bought the Allflex business, based in Vitre, France, from private equity rival Electra Partners for US$1.3 billion in 2013. The British equity firm remains Allflex’s controlling shareholder.

Financial details of the transaction, including the percentage of Montreal-based PSP’s stake, were not disclosed.

PSP, short for the Public Sector Pension Investment Board, manages pension funds for members of the federal public service including the Canadian Forces and RCMP.

— Reporting for Reuters by Matt Scuffham. Includes files from AGCanada.com Network staff.

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They turned to technology, developing equipment that boosted output — from cooling systems to milk meters and biometrics — and have made Israeli cows the most productive in the world.

Science rules today, with cows’ health, output, genetics and fertility closely monitored by management systems. In kibbutzes, or communal farms, across the country, they line up by the dozens to enter climate-controlled sheds, awaiting the latest innovations in robotic milking that drive up efficiency.

This has put the country’s agricultural tech, and the companies that provide it, in demand around the world as — with populations and dairy consumption on the rise — traditional farming methods are no longer cutting it.

Smallholder and grazing farms are, for the most part, not competitive. Large, mechanized farms that intensely monitor production and maximize yields are the order of the day.

In the United States, for example, milk production has risen by almost half since 1970, even though the number of cows has declined by about a quarter.

Developing countries, particularly in Asia, want to upgrade their outdated dairy industries and are looking to Israel for products and expertise. So are foreign investors hoping to stay ahead of the curve.

India is the biggest milk producer in the world, but most of it comes from farmers with few resources. Average production levels per cow are low, to the frustration of policy-makers.

“We’re missing a huge export opportunity to Europe and other countries,” said Devendra Fadnavis, chief minister of Maharashtra state, who came to Israel to find a solution.

“I think with Israeli technology we can take our farms to the next level.”

In Vietnam, a group of Israeli companies led by systems developer Afimilk is building a $200-million dairy farm, one of the largest projects of its kind in the world. It will eventually supply half the milk in Vietnam.

Israeli agriculture has benefited from a boom in the country’s wider high-tech industry, which has become a major growth engine and investment magnet. The country leads the OECD when it comes to R&D, spending 4.3 per cent of GDP on it, nearly twice the OECD average, according to Ernst & Young.

Companies often tap into the skills of workers trained in the military or intelligence sectors and startups benefit from tax breaks and government funding.

Milk cloud

The global market for dairy-farming technologies is worth about $850 million a year, according to industry sources. Israel exports in the sector totalled $110 million in 2014, a seven per cent rise from a year earlier, according to the country’s export institute.

Software company Akol runs a database that monitors the output, health, genetics and fertility of every cow in Israel. The database helped lift productivity to a world record of 12,083 kg per cow in 2014. By comparison, in the United States the average was 10,097 kg.

Akol has partnered with Microsoft in a joint venture to bring the technology to the developing world.

“We understood that to reach the world we need a strong cloud computing system that analyzes every component of the quality of the milk. Microsoft saw this could be a breakthrough,” said Akol chief executive Ron Shani.

He would not disclose how much the software giant invested in the venture, but Akol has put in more than $10 million.

Startup miRobot wants to take milking to the next level and says it has developed a prototype of an inexpensive, lightweight robotic arm that can clean, stimulate and attach the milking pump to the cow’s udder entirely on its own. It can be added on to existing systems, cutting the need for extra manpower.

Such Israeli technologies have not gone unnoticed.

France-based Allflex, a designer of animal identification systems with factories in the United States, Brazil, New Zealand and China, bought Israeli milking technology company SCR in December for $250 million.

In another vote of confidence, China’s vast Bright Food conglomerate bought Tnuva, Israel’s largest dairy firm, for $1.1 billion earlier this year.

“The macro conditions, are very favourable for Israel’s dairy tech industry,” said Arama Kukutai, managing director of California-based Finistere Ventures that has a $150-million agtech fund. “The country’s high-tech pedigree extends into agriculture, and we’ve been looking at opportunities to invest.”

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