Replies to post #156059 on Biotech Values

[DewDiligence]

We evidently agree on ZTS—at least for now. Another tactic is to wait until July, when knee-jerk selling by PFE shareholders with “stub” ZTS positions ought to induce at least a mild correction. My concern is that the share price might be north of $30 by then if the broad market is performing well.

[DewDiligence]

ZTS—The post-IPO distribution to PFE shareholders (planned for Jul 2013) will be in the form of a voluntary exchange of ZTS shares for PFE shares rather than an outright distribution to PFE shareholders. (This is the way BMY handled the MNJ separation.) Thus, the concern I expressed in #msg-83961284 about knee-jerk selling of ZTS “stub” positions in July does not fully apply (although it still applies in part to the extent that shareholders participating in the exchange offer change do so for a quick flip).

I’ll have more to post later with respect to the Mark Schoenebaum webcast mentioned in #msg-84052007.

[DewDiligence]

Zoetis (ZTS) IPO prices at $26/sh (above expected range):

http://www.reuters.com/article/2013/01/31/zoetis-idUSL1N0B0KGO20130131

Pfizer Inc's animal health subsidiary Zoetis raised $2.2 billion in its public offering on Thursday, becoming the largest IPO from a U.S. company since Facebook.

Madison, New Jersey-based Zoetis, which priced 86.1 million shares at $26 according to an underwriter, is now valued at around $13 billion. Shares of the company, which sells an array of products for livestock and domestic pets, were expected to price in a range of $22 to $25.

…The deal was between 10 and 20 times oversubscribed, according to a source with direct knowledge, meaning demand for the deal was very high [no kidding].

Zoetis, with annual sales of about $4.2 billion and 9,000 employees worldwide, is the largest player in the $22 billion animal health industry. It sells vaccines, diagnostics, anti-infectives and other medicines.

About two thirds of its sales are from products and services for livestock, including dairy and beef cattle, pigs, poultry and sheep. [Products for cattle comprise 38% of total revenues, according to the roadshow materials.] Its pet products include Revolution, a heartworm and flea-control medicine for cats and dogs, and Palladia, a cancer drug for dogs. The business began in 1952 as the Agriculture Division of Pfizer, and has steadily grown through in-house research and almost a dozen acquisitions, including the animal health units of rival drugmakers.

…Zoetis has operations in 60 countries, including emerging markets in Asia and South America. [61% of sales were ex-US in 2011 (the most recent full year for which data are available)].