It has been a long time since Pfizer (PFE) initiated a strategic review of its business units and in the meantime, there has been much speculation regarding which units the company would ultimately divest and the method of any such divestiture. After months of waiting (kind of reminds me of the Dwight Howard situation, except far less interesting), it now looks like a spinoff is the most likely route for the company’s multi-billion dollar animal health unit, as CEO Ian Read told Reuters in a recent interview that he “would probably handicap animal health as more likely to be a spin than a sale.” While there was still a ‘probably’ in there, it is safe to say that a spinoff is the favorite. There had been reports of potential buyers, including Bayer and Novartis, but many believe that the tax advantages of a spinoff are too great to pass up. The unit is the largest animal health business in the world and analysts believe this business could be worth between $15-20 billion.
It seems not all will be spun though as Pfizer’s Nutrition unit appears to be headed for a sale with an estimated price tag of $10b. Nestle and a partnership of Danone SA and Mead Johnson Nutrition are believed to be on the top of the buyer’s list for this business.
Pfizer expects the disposals to be completed between July 2012 and July 2013 so this is still potentially a long way off. We will keep you updated as the company decides and more information is released.
Disclosure: Author holds no position in any stock mentioned.