Pfizer’s Share Swap Offer for Zoetis Has Too Many Takers

Pfizer Inc., the world’s biggest drugmaker, completed its spinoff of Zoetis Inc. after investors bought out the drugmaker’s stake in a share exchange with the animal-health company.

Pfizer will retire about 405 million shares, or about $11.4 billion worth, at today’s price, as the swap proved so attractive that investors tried to exchange more shares than the company held in Zoetis stock, New York-based Pfizer said today in a statement. As a result of the spinoff completion, Pfizer reduced its forecast of earnings excluding certain items to $2.10 a share to $2.20 a share, from $2.14 to $2.24.

The share exchange completes Pfizer’s restructuring plan, in which it dropped two non-drug units, the animal health business and an infant nutrition line. Zoetis began trading as a separate company on Feb. 1, surging 19 percent in its debut after raising $2.24 billion in an initial public offering.

Pfizer offered investors the Zoetis stock at a 5.4 percent discount. For every $100 of Pfizer stock traded in, they’ll get $105 of Zoetis shares in return, which Pfizer gave as an incentive to participate in the exchange. Shareholders will get 24 percent of the 1.68 billion shares tendered.

Zoetis is based in Florham Park, New Jersey, and makes and sells drugs and treatments for animals. Livestock products make up 65 percent of its sales, while medicines for pets account for the rest. Much of the company’s growth depends on rising wealth levels around the world, as people eat more meat and care for companion animals.

Board Appointment

The company today also said it appointed Michael McCallister, a former chief executive officer at the Louisville, Kentucky-based health insurer Humana Inc. as Zoetis’s non-executive chairman. He replaces Chief Financial Officer Frank D’Amelio, who will remain on the Zoetis board.

Zoetis shares fell less than 1 percent to $30.38 at the close of in New York. Pfizer declined 2.6 percent to $27.71.

Chief Executive Officer Ian Read is now deciding whether to split the company in two to separate its generic drug’s business. The split could happen in the next three years.

JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley managed the deal. Skadden, Arps, Slate, Meagher & Flom LLP acted as legal adviser.

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