Pfizer to spin-off rest of animal health unit Zoetis to shareholders
22 May 2013
Pfizer Inc, the world's largest research-based pharmaceutical company, today said that it will spin off its majority 80.2-per cent stake in animal health unit Zoetis Inc to shareholders.
The New York-based drug giant will allow shareholder to exchange all, some or none of their shares of Pfizer common stock for shares of Zoetis common stock owned by Pfizer at a 7 per cent discount.
The offer would allow shareholders to exchange $100 worth of Pfizer stock for $107.52 worth of Zoetis stock, which were priced at $26 in the IPO in February, has since risen by 27 per cent and closed yesterday at $33.04.
Pfizer expects the exchange offer to be tax-free for US Pfizer shareholders, except with respect to cash received in lieu of a fractional share. It owns 400,985,000 shares of Zoetis Class B common stock that it will convert to Class A shares for the exchange.
''We are pleased with Zoetis's performance since the IPO in February. Given the strong demand in the IPO and a favorable market environment, we concluded that now is the appropriate time to distribute our remaining stake in Zoetis,'' said Ian Read, Pfizer chairman and CEO.
''We expect that this exchange offer will continue to deliver value to Pfizer shareholders by reducing the number of our outstanding shares in a tax-efficient manner. At the same time, we believe that this transaction better positions Pfizer to focus on our core business as an innovative biopharmaceutical company,'' he added.
In July 2011, Pfizer said that it was exploring alternatives, including a possible sale of its animal health and nutrition businesses, in the next two years in order to focus on expanding its low-cost pharmaceuticals unit.
Pfizer had hired Morgan Stanley and Centerview Partners to evaluate the businesses and complete any transactions in 12 to 24 months.
In April 2012 it sold its nutrition business to Swiss food giant Nestle SA for $11.85 billion and spun off 10.9 per cent of its animal health unit tin February this year to shareholders, and renamed the company to Zoetis.
Zoetis is the world's largest animal health company and is a leader in the discovery, development, manufacture and commercialisation of products, including vaccines, medicines, diagnostics and genetic tests to prevent and treat disease in livestock and companion animals.
The company sells more than 300 product lines to livestock producers and veterinarians, has operations in over 60 countries, an extensive research and development network with major research centre on four continents and strong market positions across several geographic regions, including the US, Europe, Africa and the Middle East, Canada and Latin America, and Asia-Pacific.
Around 66 per cent of its revenue comes from products used to prevent or treat conditions in livestock, with the remaining one-third coming from pet-care treatments and vaccines.
Zoetis, which competes with the animal health businesses of Merck & Co, Eli Lilly and Co, Sanofi, and Novartis, holds a 19-per cent share of an estimated $22-billion global market.
Pfizer animal health's entry into veterinary diagnostics follows a series of moves it made in 2010 to become a leader in the animal health industry, which includes expanding into the rapidly growing aquaculture segment with the acquisition of Microtek International and entry into animal health generic medicines with the acquisition of Vetnex in India.