Pfizer's (PFE) animal health spin-off, Zoetis (ZTS) prices its IPO at $26 per share, above the...

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DIPENTIMA9 Comments (2)
 
I am a retired CPA, now an investor. I guess it's the CPA in me that asks: How can a company trading at 27+ spin off a company that sells at 22-25 without losing value? And since I own Pfizer, how do I benefit? Similar thing happened with COP spinning off Philips 66. How does this work? Educate me.
31 Jan, 08:45 PM Reply Like

MexCom Comments (2836)
 
The market is valuing the spin-off higher than expected. It probably is higher than the asset value being carried on the books. If they were to revalue the balance sheet with market prices, they would realize an extra ordinary gain. PFE is turning out to be an excellent investment. I recently added and now have a full position with an average purchase date of November 2012. It is producing for me a 36% annualized rate of return.
1 Feb, 05:50 AM Reply Like

normanbk Comments (35)
 
At the time I posted my comment, I did not know PFE had an 80% stake that it retained.......so smart to create value for the PFE stock while retaining control.....
4 Feb, 06:42 AM Reply Like

normanbk Comments (35)
 
When you find out, please let me know.
31 Jan, 09:54 PM Reply Like

StLoMoDan Comments (41)
 
i do not know the details of this spin-off and I am a shareholder in PFE. I can answer you other question. if you owned COP at the time of the PSX spin-off then you should have received 1 share of PSX for every 2 shares of COP. PSX was offered at about $34 per share so COP dropped by $17 per share that day.
31 Jan, 10:11 PM Reply Like

kt5744@gmail.com Comments (44)
 
I don't feel so bad after reading DIPENTIMA9's comments with him being a CPA. I am a current Pfizer shareholder and I guess I can't see what the benefit is. Am really perplexed. Some articles I read say it is not a spin off but an IPO. Whatever it is if current shareholders receive nothing in exchange that what is so beneficial about it?? Am not real "up" on this kind of stuff so excuse my ignorance please.
31 Jan, 10:30 PM Reply Like

artheen Comments (3)
 
Some Numbers: Just to put things in perspective.
Pfizer holds 413.9M shares (after the IPO) of Zoetis. PFE has 7.36B. That works out to 0.056236 ZTS shares for every share of PFE. So if Pfizer decides to distribute ZTS shares to its shareholders 100 PFE shares will get 5.6236 ZTS shares. I think the, impact on PFE shares should be that extent. (0.056236 * 26 = $1.46 , $26 is IPO price, so in theory PFE could go down by that amount, if they decide to distribute their holding at a future date that, $26 will change)
1 Feb, 09:19 AM Reply Like

schil2am Comment (1)
 
I wouldn't focus on the share price so much as I would the market cap of the spinoff. PFE from my understanding will still have a controlling share in the company. With the proceeds of around $4 billion they plan on doing a share repurchase. I believe that they will eventually sell the remainder of their shares in ZTS and hopefully at that time it will be a share swap.
5 Feb, 09:20 AM Reply Like

angelamaas Comments (10)
 
I think ZTS can be $26/share when PFE is around $27 because there are more outstanding shares in PFE.

So if there are only 1 millions shares of ZTS for example (I have no clue how many shares are being sold) it is only valued at $26 million versus around a billion shares of pfizer at $27 each and a 200Billion value.

Pfizer is selling a 20% stake of Zoetis and keeping 80% ownership.

As far as I could tell, it looks like Pfizer shareholders get nothing from this deal, except that Pfizer is collecting some upfront cash for the IPO (minus the charges to Goldman Sachs and the other banks frontrunning the deal of course.)

I sold all of my shares in Pfizer on January 30th after 12 long years... Maybe it was a bad decision? Time will tell...
5 Feb, 12:43 PM Reply Like

BPfix Comments (7)
 
I think I will wait for it to drop.
5 Feb, 02:40 PM Reply Like

User 558853 Comment (1)
 
Good question. I'm an accountant and PFE shareholder too. How does this spinoff benefit the shareholder?
5 Feb, 02:44 PM Reply Like

kt5744@gmail.com Comments (44)
 
This is for you CPA's out there. Wouldn't the spin off affect the cost basis of the parent company Pfizer? For people who now sell their PFE shares after the spin off wouldn't the basis have to be adjusted?
6 Feb, 07:56 AM Reply Like