Pfizer, Inc. (NYSE:PFE) announced Wednesday that it will split off its remaining interest in animal health company, Zoetic Inc. (ZTS), through an exchange offer. The decision comes as the company is working to refocus its interest on human drugs and vaccines, leading it to shed nonpharmaceutical assets over the past two years.
The world’s largest drugmaker spun off Madison, New Jersey-based Zoetis almost four months ago and now is ready to reduce its 80.2 percent stake. Zoetis completed its initial public offering in February when Pfizer sold nearly 20 percent of its shares. Though the company indicated it might eventually sell off its remaining stake, it never confirmed when. Pfizer’s decision to sell comes earlier than most analysts expected, but Zoetis’ solid performance of shares likely led the company to act sooner rather than later. ”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,” Pfizer Chief Executive Ian Reid explained as reported by Bloomberg.
In a statement released Wednesday, Pfizer announced that their shareholders would have the option of exchanging their shares for Zoetis stock in a tax-free transaction. Should the exchange be fully subscribed, Zoetis will become fully independent. Pfizer shareholders will be given the opportunity to obtain Zoetis shares at a 7 percent discount, with an upper limit of 0.9898 shares of Zoetis stock per Pfizer share.
The final exchange ratio will be announced June 19, and according to The Wall Street Journal, Zoetis is excited about the prospect of its independence. ”We have been preparing for this day for nearly two years, and we are excited by the opportunity to stand on our own as the world’s leading animal health company,” Zoetis Chief Executive Juan Ramon Alaix said.
The separation will mark the end of Reid’s plans to streamline the company and focus on the production of new drugs. Last year, Pfizer sold its baby food unit to Nestle SA. Additionally, Pfizer has worked to cut costs and improve its research and development after it lost its market exclusivity for its big-selling cholesterol drug Lipitor and other drugs.
Zoetis shares closed Tuesday at $33.04, up 27 percent since the IPO. Pfizer shares rose 3.11 percent to $29.67 as of 12 p.m. New York time, while Zoetis fell -1.15% percent to 32.66.
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