UPDATE: Pfizer to Split Off Remaining Interest in Zoetis
Pfizer Inc. (NYSE: PFE) today announced its intention to split off its
remaining interest in Zoetis Inc. (NYSE: ZTS), through an exchange offer.
Zoetis, formerly Pfizer's animal health business, completed its initial public
offering (IPO) in February 2013. In the exchange offer, Pfizer shareholders
can exchange all, some or none of their shares of Pfizer common stock for
shares of Zoetis common stock owned by Pfizer. The exchange offer is
anticipated to be tax-free for participating Pfizer shareholders in the United
States, except with respect to cash received in lieu of a fractional share.
The completion of the full separation of Zoetis is expected to be accretive to
Pfizer's earnings per share beginning in 2014.
Pfizer also announced today that, in connection with the planned split-off, it
has received a waiver of the 180-day lock-up from the joint book running
managers of the Zoetis IPO.
We are pleased with Zoetis's performance since the IPO in February. 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, said
Ian Read, Pfizer Chairman and Chief Executive Officer. We expect that this
exchange offer will continue to deliver value to Pfizer shareholders by
reducing the number of our outstanding shares in a tax-efficient manner. At
the same time, we believe that this transaction better positions Pfizer to
focus on our core business as an innovative biopharmaceutical company.
The exchange offer is designed to permit Pfizer shareholders to exchange their
shares of Pfizer common stock for shares of Zoetis common stock at a 7%
discount, subject to an upper limit of 0.9898 shares of Zoetis common stock
per share of Pfizer common stock. If the upper limit is not in effect, for
each $100.00 of shares of Pfizer common stock accepted in the exchange offer,
tendering shareholders would receive approximately $107.52 of Zoetis common
stock. These values will be determined by the simple arithmetic average of the
daily volume-weighted average price of Pfizer common stock and Zoetis common
stock on the NYSE during the three consecutive trading days ending on and
including the expiration date of the exchange offer, which are expected to be
June 17, June 18 and June 19, 2013. The final exchange ratio, reflecting the
number of shares of Zoetis common stock that tendering shareholders will
receive for each share of Pfizer common stock accepted in the exchange offer,
will be announced by press release by 4:30 p.m., New York City time, on June
19, 2013, unless the exchange offer is extended or terminated. The final
exchange ratio, when announced, and a daily indicative exchange ratio
beginning at the end of the third day of the exchange offer period, will also
be available at www.zoetisexchange.com.
The completion of the exchange offer is subject to certain conditions,
including: the distribution of at least 160,394,000 shares of Zoetis common
stock in exchange for shares of Pfizer common stock tendered in the exchange
offer; the receipt of an opinion of counsel that the exchange offer will
qualify for tax-free treatment to Pfizer and its participating shareholders;
and the continued effectiveness and validity of a private letter ruling
received from the U.S. Internal Revenue Service, regarding the exchange offer,
among other things.
Pfizer owns 400,985,000 shares of Zoetis Class B common stock, which
represents approximately 80.2% of the outstanding common stock of Zoetis.
Prior to completion of the exchange offer, Pfizer intends to convert its
Zoetis Class B common stock into Zoetis Class A common stock in an amount
sufficient such that Zoetis Class A common stock may be distributed in the
exchange offer. Upon the completion of a fully subscribed exchange offer, only
Zoetis Class A common stock (which will be reclassified as Zoetis common
stock) will remain outstanding. The largest possible number of shares of
Pfizer common stock that will be accepted in the exchange offer equals
400,985,000 divided by the final exchange ratio. Because the exchange offer is
subject to proration if the exchange offer is oversubscribed, the number of
shares of Pfizer common stock that Pfizer accepts in the exchange offer may be
less than the number of shares tendered. If the exchange offer is
undersubscribed, Pfizer would distribute less than 400,985,000 shares of
Zoetis common stock. In that case, Pfizer would continue to own an interest in
Zoetis and, depending on the number of shares of Zoetis common stock
distributed in the exchange offer, Pfizer could retain voting control of
Zoetis with respect to the election of directors. In addition, Pfizer could
use additional exchange offers or a special dividend to all Pfizer
shareholders to complete the disposition of its Zoetis shares.
The exchange offer is voluntary for Pfizer shareholders. No action is
necessary for Pfizer shareholders who choose not to participate, and their
existing Pfizer shares will not be impacted.
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