Zoetis Inc.'s (ZTS) stock rose in its public-trading debut, as
investors jumped at the opportunity to invest in Pfizer Inc.'s
(PFE) animal-medicine unit and at the largest U.S. offering since
the initial public offering of Facebook Inc. (FB).
Shares opened at $31.50 on the New York Stock Exchange, up 21%
from the $26 offer price, and traded recently at $30.65.
Late Thursday, Zoetis priced shares in its $2.2 billion IPO
above the $22-to-$25 range initially outlined in documents filed
with the Securities and Exchange Commission. Zoetis commands a
market value of about $13 billion based on the offer price.
Zoetis, of Madison, N.J., is the largest animal-medicine company
in the world by revenue. It makes vaccines and drugs for livestock
and pets. The company sells its products directly to livestock
producers and veterinarians in 70 countries. Revenue from livestock
represents the bulk of its sales.
The company competes primarily with the animal-health segments
of other major drug companies, including Merck & Co. (MRK),
Sanofi SA (SNY) and Eli Lilly & Co. (LLY).
Pfizer, the world's largest drug maker by sales, has been
shedding businesses outside its core medicine franchise to focus on
developing prescription medicines to replace aging products such as
cholesterol drug Lipitor, which now faces generic competition. Last
year, Pfizer sold its infant-nutrition business to Nestle SA
(NESN.VX).
Zoetis reported revenue of $3.2 billion for the first nine
months of last year, or about 7% of Pfizer's $43.9 billion in
overall revenue during that period. Zoetis's revenue increased 1.7%
over that time, while earnings rose 87% to $446 million.
Current Pfizer shareholders must go into the open market to buy
Zoetis shares. Pfizer will retain a roughly 83% stake of Zoetis
after the offering.
Other large carve-outs from well-known companies have been
successful for participating investors in recent years.
Bristol-Myers Squibb Co. (BMY) sold its baby-formula maker Mead
Johnson Nutrition Co. (MJN) in 2009. Mead Johnson's shares have
more than tripled since.
The deal is the largest IPO from a U.S. company since Facebook's
$16 billion deal May 18. It is also the largest carve-out to list
on a U.S. exchange since U.K. hedge-fund manager Man Group PLC
(EMG.LN) broke away from MF Global Ltd., which was its brokerage
arm, in a $2.9 billion deal in 2007, according to Dealogic.
J.P. Morgan Chase & Co. (JPM), Bank of America Corp. (BAC)
and Morgan Stanley (MS) served as Zoetis's lead underwriters.
Write to Chris Dieterich at
christopher.dieterich@dowjones.com
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