Pfizer Inc. (NYSE: PFE) today announced that, based on
preliminary results, its previously announced offer to its
shareholders to exchange all, some or none of their shares of
Pfizer common stock for shares of Zoetis Inc. (NYSE: ZTS) common
stock owned by Pfizer was oversubscribed. The exchange offer
expired at 12:00 midnight, New York City time, on June 21, 2013.
Under the terms of the exchange offer, 0.9898 shares of Zoetis
common stock will be exchanged for each share of Pfizer common
stock accepted in the exchange offer.
According to the exchange agent, Computershare Trust Company,
N.A., 1,680,439,287 shares of Pfizer common stock were validly
tendered and not validly withdrawn, including 497,530,121 shares
that were tendered by notice of guaranteed delivery. Pfizer has
accepted 405,117,195 of the tendered shares in exchange for the
400,985,000 shares of Zoetis common stock owned by Pfizer. Because
the exchange offer was oversubscribed, Pfizer accepted only a
portion of the shares of its common stock that were validly
tendered and not validly withdrawn, on a pro rata basis in
proportion to the number of shares tendered. Shareholders who owned
fewer than 100 shares of Pfizer common stock, or an “odd-lot”, who
have validly tendered all of their shares and made the appropriate
election, will not be subject to proration, in accordance with the
terms of the exchange offer.
Based on the total number of shares of Pfizer common stock
reported to be tendered prior to the expiration of the exchange
offer, it is estimated that approximately 24% of the tendered
shares of Pfizer common stock will be exchanged, assuming all
shares tendered by guaranteed delivery procedures are delivered
under the terms of the exchange offer. This preliminary proration
factor is subject to change based on the number of tendered shares
that satisfy the guaranteed delivery procedures, as well as the
number of “odd-lot” shares that were validly tendered and not
subject to proration. Pfizer expects to announce the final
proration factor promptly following the expiration of the
guaranteed delivery period, which is expected to occur on June 26,
2013. Shares of Pfizer common stock tendered but not accepted for
exchange will be returned to the tendering shareholders in
book-entry form promptly after the final proration factor is
announced.
Promptly after the final proration factor is announced, the
exchange agent will credit shares of Zoetis common stock for
distribution in the exchange offer in book-entry form to accounts
maintained by the Zoetis transfer agent for tendering shareholders
who have validly tendered and not validly withdrawn their shares of
Pfizer common stock. Checks in lieu of fractional shares of Zoetis
common stock will be delivered after the exchange agent has
aggregated all fractional shares and sold them in the open
market.
Following the expiration of the exchange offer, Pfizer converted
all of its Zoetis Class B common stock into Zoetis Class A common
stock and, as noted above, all such converted Class A common stock
will be distributed to Pfizer shareholders who validly tendered and
did not validly withdraw their shares of Pfizer common stock. As a
result, Pfizer no longer holds any ownership interest in Zoetis.
Pfizer continues to expect the full separation of Zoetis to be
accretive on a full-year basis to Pfizer’s Adjusted Diluted EPS(2)
and Reported Diluted EPS(3) in 2014.
J.P. Morgan Securities LLC, BofA Merrill Lynch, Goldman Sachs
& Co. and Morgan Stanley served as the dealer managers for the
exchange offer.
2013 Financial Guidance(1)
As a result of the full separation of Zoetis, Pfizer will now
present Zoetis’ financial results from January 1, 2013 to June 24,
2013 as a discontinued operation.
Pfizer is adjusting its 2013 financial guidance solely to
reflect the impact of the Zoetis exchange offer. The adjustment
reflects modifications to the following components:
- Reported Revenues, Adjusted Cost of
Sales as a Percent of Revenues(2), Adjusted SI&A Expenses(2),
Adjusted R&D Expenses(2) and Adjusted Other
(Income)/Deductions(2) : Actual and projected revenue and expense
contributions of Zoetis have been excluded for the full-year 2013
from these components. While such contributions of Zoetis also have
been excluded for the full-year 2013 from the Effective Tax Rate on
Adjusted Income(2) , this did not result in a change in that
component.
- Adjusted Diluted EPS(2): Actual and
projected financial results of Zoetis have been excluded for the
full-year 2013 through:
- The presentation of Zoetis financial
results as a discontinued operation from January 1, 2013 to June
24, 2013. Zoetis was wholly owned by Pfizer through February 6,
2013, and 80.2% owned by Pfizer from February 7, 2013 to June 24,
2013.
- The removal of the 80.2% of Zoetis
projected financial results from June 24, 2013 through December 31,
2013.
In addition, the weighted average shares outstanding used in the
computation of Adjusted Diluted EPS(2) reflects the net
reduction(4) in shares of Pfizer’s outstanding common stock as a
result of the exchange offer. Because this net reduction(4)
occurred on June 24, 2013, Pfizer will recognize only a
partial-year benefit to its full-year 2013 Adjusted Diluted
EPS(2).
The impact of the removal of the full-year 2013 financial
contribution of Zoetis as well as the impact of the partial-year
benefit from the net reduction(4) in shares of Pfizer’s outstanding
common stock due to the exchange offer resulted in a $0.04 decrease
to the upper and lower ends of Pfizer’s projected range for 2013
Adjusted Diluted EPS(2).
- Reported Diluted EPS(3):
- As previously mentioned, the financial
results of Zoetis from January 1, 2013 to June 24, 2013 are
presented as a discontinued operation and, accordingly, continue to
impact full-year 2013 guidance for Reported Diluted EPS(3).
- Full-year 2013 guidance for Reported
Diluted EPS(3) excludes the 80.2% of Zoetis projected financial
results from June 24, 2013 through December 31, 2013.
- Full-year 2013 guidance for Reported
Diluted EPS(3) reflects the partial-year benefit of the net
reduction(4) in weighted average shares outstanding used to
calculate Reported Diluted EPS(3).
- Full-year 2013 guidance for Reported
Diluted EPS(3) was not adjusted to reflect the gain on the
disposition of shares of Zoetis common stock.
- The impact of the removal of the
financial contribution of Zoetis from June 24, 2013 through
December 31, 2013, as well as the impact of the partial-year
benefit of the net reduction(4) in shares of Pfizer’s outstanding
common stock due to the exchange offer, did not result in a change
to Pfizer’s projected range for 2013 Reported Diluted EPS(3).
Reported Revenues $50.8 to $52.8 billion
(previously $55.3 to $57.3 billion)
Adjusted Cost of Sales(2) as a Percent of Revenues 18.0% to
19.0%
(previously 19.0% to 20.0%)
Adjusted SI&A Expenses(2) $14.2 to $15.2 billion
(previously $15.6 to $16.6 billion)
Adjusted R&D Expenses(2) $6.1 to $6.6 billion
(previously $6.5 to $7.0 billion)
Adjusted Other (Income)/Deductions(2) Approximately $800
million
(previously approximately $900
million)
Effective Tax Rate on Adjusted Income(2) Approximately 28.0%
Reported Diluted EPS(3) $1.44 to $1.59 Adjusted Diluted
EPS(2) $2.10 to $2.20
(previously $2.14 to $2.24)
(1) The 2013 financial guidance has been developed using the
following estimates, assumptions and approaches:
- Does not assume the completion of any
business development transactions not completed as of March 31,
2013, including any one-time upfront payments associated with such
transactions, except for the Zoetis exchange offer.
- Reflects the impact of the Zoetis
exchange offer, except for the gain on the disposition of shares of
Zoetis common stock.
- Excludes the potential effects of the
resolution of litigation-related matters not substantially resolved
as of March 31, 2013.
- Assumes exchange rates that are a blend
of the actual exchange rates in effect during the first three
months of 2013 and the mid-April 2013 exchange rates for the
remainder of the year.
The reconciliation of the 2013 Adjusted Income(2) and Adjusted
Diluted EPS(2) guidance to the 2013 Reported Net Income
Attributable to Pfizer Inc. and Reported Diluted EPS Attributable
to Pfizer Inc. common shareholders guidance is as follows:
($ in billions, except per share amounts) Income/(Expense)
Net Income Diluted EPS Adjusted Income/Diluted EPS(2)
Guidance ~$14.4-$15.1 ~$2.10-$2.20 Purchase accounting impacts of
transactions completed as of March 31, 2013 (3.4) (0.50)
Acquisition-related costs (0.4 - 0.5) (0.06 - 0.07) Certain other
items, including non-acquisition-related restructuring costs (0.5 –
0.8) (0.08 - 0.12) Discontinued Operations 0.2 0.03 Reported Net
Income Attributable to Pfizer Inc./Diluted EPS(3) Guidance
~$9.9-$11.0 ~$1.44-$1.59
(2) "Adjusted Income" and its components and "Adjusted Diluted
Earnings Per Share (EPS)" are defined as reported U.S. generally
accepted accounting principles (GAAP) net income(3) and its
components and reported diluted EPS(3) excluding purchase
accounting adjustments, acquisition-related costs, discontinued
operations and certain significant items. Adjusted Cost of Sales,
Adjusted Selling, Informational and Administrative (SI&A)
expenses, Adjusted Research and Development (R&D) expenses and
Adjusted Other (Income)/Deductions are income statement line items
prepared on the same basis, and, therefore, components of the
overall adjusted income measure. As described under Adjusted Income
in the Management’s Discussion and Analysis of Financial Condition
and Results of Operations section of Pfizer's Form 10-Q for the
fiscal quarter ended March 31, 2013, management uses adjusted
income, among other factors, to set performance goals and to
measure the performance of the overall company. We believe that
investors' understanding of our performance is enhanced by
disclosing this measure. See the accompanying reconciliations of
full-year 2013 guidance for adjusted income and adjusted diluted
EPS to full-year 2013 guidance for reported net income(3) and
reported diluted EPS(3). The adjusted income and its components and
adjusted diluted EPS measures are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
(3) “Reported Net Income” is defined as net income attributable
to Pfizer Inc. in accordance with U.S. GAAP. “Reported Diluted EPS”
is defined as reported diluted EPS attributable to Pfizer Inc.
common shareholders in accordance with U.S. GAAP.
(4) The impact of the Zoetis exchange offer on the full-year
weighted average shares outstanding also includes the negative
impact on anticipated full-year share repurchases because of the
prohibition imposed by law on share repurchases during and for 10
business days after the exchange offer period.
About Pfizer Inc.
At Pfizer, we apply science and our global resources to bring
therapies to people that extend and significantly improve their
lives. We strive to set the standard for quality, safety and value
in the discovery, development and manufacture of health care
products. Our global portfolio includes medicines and vaccines as
well as many of the world's best-known consumer health care
products. Every day, Pfizer colleagues work across developed and
emerging markets to advance wellness, prevention, treatments and
cures that challenge the most feared diseases of our time.
Consistent with our responsibility as one of the world's premier
innovative biopharmaceutical companies, we collaborate with health
care providers, governments and local communities to support and
expand access to reliable, affordable health care around the world.
For more than 150 years, Pfizer has worked to make a difference for
all who rely on us. To learn more, please visit us
at www.pfizer.com.
Disclosure Notice:
The information contained in this release is as of June 24,
2013. Pfizer assumes no obligation to update forward-looking
statements in this release as a result of new information or future
events or developments. This release contains forward-looking
information, including financial projections for full-year 2013 as
well as a projection regarding when the full separation of Zoetis
is expected to be accretive on a full-year basis to Pfizer’s
earnings per share, that involves substantial risks and
uncertainties. Such risks and uncertainties include, among other
things, the uncertainties and variables inherent in business
operating and financial performance, including, among other things,
the outcome of research and development activities; the ability to
successfully market existing and new products; competitive
developments; general economic, political, business, industry,
regulatory and market conditions; and the other risks and
uncertainties set forth in Pfizer’s Annual Report on Form 10-K/A
for the year ended December 31, 2012 and in its reports on Form
10-Q and 8-K.
Additional Information and Where to Find It
The terms and conditions of the exchange offer are more fully
described in a registration statement on Form S-4, that includes a
Prospectus, previously filed by Zoetis and a Schedule TO previously
filed by Pfizer with the Securities and Exchange Commission (SEC),
in each case as amended. The Prospectus contains important
information about the exchange offer, Pfizer, Zoetis and related
matters, and Pfizer delivered the Prospectus to holders of Pfizer
common stock. The SEC maintains a website that contains reports,
proxy statements and other information that Pfizer and Zoetis file
electronically with the SEC. The address of that website is
http://www.sec.gov. Holders of Pfizer common stock may also obtain
a copy of the Prospectus by clicking on the appropriate link on
http://www.zoetisexchange.com. Related documents may also be
obtained for free from Pfizer at http://www.investor.pfizer.com/ or
Zoetis at http://www.zoetis.com/. Pfizer has retained Georgeson
Inc. as the information agent for the exchange offer. If you have
any questions about the terms of the exchange offer, you may
contact the information agent at 1-866-628-6024 (toll-free in the
United States), 1-800-223-2064 (toll-free for banks and brokers),
00800 3814-3814 (toll-free in Sweden) or +1-781-575-3340 (all
others outside the U.S.)
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