January 31, 2013 11:16 pm

Zoetis raises $2.24bn in IPO

Zoetis, the animal-health business that Pfizer is spinning off, became the largest US initial public offering since Facebook after the company raised $2.24bn from investors on Thursday.

The company sold 86.1m shares at $26 each, above its initially planned range of between $22 and $25 per share.

The offering comes as demand for IPOs has intensified in recent weeks amid strong gains for stocks and low levels of market volatility. A total of 12 IPOs have raised more than $5bn in January, according to Dealogic, making it one of the best months for new equity issuance in the last year.

Ian Read, Pfizer’s chief executive, announced last year that the company would turn its animal-health unit into a standalone business as part of its plan to focus on its core drugs business. Pfizer also sold its infant nutrition unit last year to Nestlé for $11.85bn.

The animal-health business generated $4.3bn in revenues in 2012. It sells more than 300 lines of products to livestock producers and veterinarians across 70 countries around the world.

Pfizer is offering about 20 per cent of Zoetis in the IPO. Frank D’Amelio, Pfizer’s chief financial officer, told analysts on Tuesday: “We’ll have a number of alternatives that are available to us for distributing the remaining shares and obviously we’ll do what’s best from an after-tax return to our shareholders.”

Analysts have suggested that other drugmakers could follow Pfizer’s lead and sell their animal health units or that Zoetis could become a takeover target.

Pfizer signalled earlier this week that it could eventually split its core drugs business into “value” and “innovative” units.

Trading in its shares is due to begin on Friday on the New York Stock Exchange under the symbol “ZTS”.

JPMorgan Chase, Bank of America Merrill Lynch and Morgan Stanley were the lead underwriters for the offering.

Zoetis is derived from the word zoetic, which means “pertaining to life”.

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