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Pfizer Baby-Food Exit Is Win-Win for Holders: Chart of the Day

Pfizer Inc.’s shareholders are in a win-win situation as the world’s largest drugmaker considers whether to spin off or sell its baby-food unit as part of a corporate overhaul.

As the CHART OF THE DAY shows, a comparable spinoff has paid off at Bristol-Myers Squibb Co., which got out of the infant-formula business by distributing its stake in Mead Johnson Nutrition Co. in December 2009.

Mead Johnson has climbed about five times as much as Bristol-Myers since the split, as depicted in the chart. The companies went their separate ways 10 months after an initial public offering of the unit’s shares.

Pfizer’s holders may fare even better if the company exits baby food through a sale instead, according to Seamus Fernandez, an analyst at Leerink Swann LLC.

“Demand would be high” and a sale would be relatively straightforward, Fernandez wrote yesterday in a report. He estimated that the unit’s price tag would be about $10 billion, or 5 times sales.

Anyone looking for a spinoff may have to set their sights on Pfizer’s animal-health unit, the report said. The drugmaker said yesterday that it would divest that business, along with baby food, while keeping units that make consumer health-care products and off-patent prescription drugs.

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