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Pfizer Divesting Zoetis, Returning Human Health Focus

Tickers in this article: PFE

Pfizer Inc. (PFE) will be divesting Zoetis, which makes vaccines and drugs for pets, cattle, swine and other farm animals. The IPO hopes to raise up to $2.2 billion for the animal-medicine and vaccine company and is another attempt by Pfizer to focus on its core human-health businesses going forward.

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Pfizer sold Vevey, an infant nutrition business, to Nestle SA for $11.9 billion last April. Bristol-Myers Squibb Co. (BMY) has also participated in divesting activity, selling Mead Johnson Nutrition Co. (MJN).  Since the sale, both stocks have gained 60% and 160% respectively.

Zoetis’s IPO is expected to price on the NYSE on January 31st under the ticker ZTS. Pfizer will continue to hold 414 million class B shares and will have 83% control over Zoetis. 81.6 million Class A shares will be on the market for $22-25 each.

Conclusion

Pfizer is trying to trim the fat and focus on its core business. CEO Ian Read is shrinking the drugmaker with these divestures, helping spur future growth and increasing returns for shareholders. A divesture, like increasing dividends or buying back stock, will return value to shareholders.

Zoetis is the biggest animal-medicine and vaccine company in the world by revenue. 

Written by Kapitall's Nick Sousa