May 22 Pfizer Inc said on Wednesday it
will spin off its majority stake in animal health business
Zoetis Inc to shareholders by allowing them to swap
Pfizer stock for Zoetis shares at a 7 percent discount.
Pfizer, the largest U.S. drugmaker, sold Zoetis shares in an
initial public offering in February that raised $2.2 billion.
Pfizer retained an 80 percent stake in Zoetis after the IPO and
now plans to unwind that, starting with this offer.
The move comes as Pfizer continues to unload its
non-pharmaceuticals businesses to focus on its core prescription
drugs business, which has far higher profit margins.
The offer would allow Pfizer shareholders to exchange $100
worth of company stock for $107.52 worth of Zoetis stock. The
premium is meant to encourage Pfizer shareholders to acquire
Pfizer owns 400,985,000 shares of Zoetis Class B common
stock that it will convert to Class A shares for the exchange.
Pfizer shareholders must request at least 160.4 million shares
of Zoetis common stock for the exchange to take effect.
Pfizer said that selling the rest of Zoetis will boost
earnings starting in 2014. If it does not sell all of its stake
through the exchange offer, Pfizer said it could turn to
additional exchange offers or a special dividend.
Pfizer shares rose 3 percent to $29.65 on Wednesday while
Zoetis shares fell 1.5 percent to $32.53, moving closer to their
relative values under the estimated exchange ratio.
Zoetis shares were priced at $26 in the February IPO and
closed their first day of trading at $31.01.
In April 2012 Pfizer sold its infant nutrition business to
Nestle SA for $11.9 billion. The drugmaker has said it
plans to use cash from asset sales to aggressively buy back its
Last month Pfizer said it had repurchased $6.3 billion of
stock this year and was authorized to spend another $5.5 billion
Meanwhile, the company is considering whether to sell off
its wide array of generic prescription drugs, which it calls
"established products." In that event, the company would keep
its branded patent-protected medicines.
Chief Executive Ian Read in April said Pfizer would need
three years to evaluate whether to spin off the generic
JPMorgan Chase, Bank of America, Goldman
Sachs & Co and Morgan Stanley are managing the
exchange offer. Skadden, Arps, Slate, Meagher & Flom is advising