* To cut 20-25 pct jobs, R&D spend; shut storage units
* Q1 profit tops estimates on strong sales in Americas
* Shares up 0.6 pct in afternoon trading (Adds CEO comments, analyst comments, details; updates shares)
May 5 (Reuters) - Animal health products maker Zoetis Inc said it plans to cut up to a quarter of its workforce and exit nearly 40 percent of its manufacturing plants in its first major restructuring since being spun off from Pfizer Inc two years ago.
The restructuring comes a month after activist investor Pershing Square seated their second nominee on Zoetis’s board in exchange for not soliciting any takeover offers for the company.
“After two years of separating from Pfizer ... we have identified significant opportunities for improvement,” Zoetis Chief Executive Juan Ramon Alaix said on a call on Tuesday.
Alaix, who was heading the animal health business even at Pfizer, was speaking after Zoetis posted a better-than-expected quarterly profit due to strong sales in the Americas.
Alaix also outlined Zoetis’s plans to cut between 20 and 25 percent of its workforce, trim management layers, shut about a third of its storage units that held low-margin drugs and reduce research and development spending.
Analysts said there were better chances that the company’s profit growth increases in the long term after the restructuring.
Zoetis shares were up 0.6 percent at $45.69 in afternoon trading on the New York Stock Exchange.
“The cost cutting initiative announced today should not come as a complete surprise to investors following the announcement of Pershing Square’s accumulation of a 8.4 percent stake,” Citigroup analyst Liav Abraham wrote in a note.
Last month Bill Ackman’s Pershing Square, Zoetis’s biggest shareholder, and Sachem Head Group seated their second nominee on the company’s 11-member board.
Zoetis did not give any details on the ten manufacturing plants it planned to sell or exit.
The company operates 27 such sites, 13 of which are in the United States and four in China, according to a regulatory filing.
Zoetis said it also planned to reduce operations in Venezuela, citing the country’s volatile currency. The company got about 2 percent of 2014 revenue from Venezuela, but does not own a manufacturing facility there.
Zoetis said it expects to take a charge of $400 million to $500 million related to the restructuring, which is expected to yield about $300 million in cost savings. (Editing by Saumyadeb Chakrabarty and Savio D’Souza)
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