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Pfizer takes another step in restructuring

by Ben Fidler | Published February 7, 2012 at 2:18 PM

Pfizer Inc. took a step toward the long-awaited divestiture of its animal health business on Tuesday, Feb. 7, by agreeing to sell the India-based part of that division to another wholly owned unit the drugmaker is in the midst of creating.

Pfizer Ltd., the Indian unit of Pfizer, said Tuesday that its board of directors has approved a sale of its animal health business for roughly 4.4 billion rupees ($89.42 million). Pfizer is selling the business to a different division -- one that is in the process of being incorporated -- as part of a plan to reorganize itself in a way that will make a divestiture of its global animal health business easier.

"Pfizer is undertaking certain internal reorganization steps that are intended to give Pfizer the broadest possible flexibility to pursue a range of possible transactions in the future," the company said in a statement to the Bombay Stock Exchange.

The yet-to-be-incorporated subsidiary will pay for the Indian animal health business in cash, by issuing stock in itself to Pfizer or both. Pfizer will carry the deal out through a "slump sale," a method outlined in Indian corporate law by which a company can transfer a division of itself to another company.

The move is part of Pfizer's grand restructuring plan, an initiative outlined in July 2011 to review strategic alternatives for both its animal health and nutrition businesses and to focus more on its core pharmaceutical business as it barrels through the post-Lipitor era (Pfizer's flagship cholestorol drug, which posted $10.8 billion in sales in 2010, went off patent in November). Pfizer has yet to decide whether or not it will sell or spin out one or both of the divisions, and CEO Ian Read has said publicly that the company will finalize strategic decisions for the two divisions between July 2012 and July 2013.

Even so, Pfizer has reportedly advanced in an auction process for the nutrition unit, which brought in about $1.87 billion of its roughly $68 billion in revenue in 2010 and sells infant and toddler nutritional products. Reports indicate that Nestlé SA, Groupe Danone SA, Mead Johnson Nutrition Co. and H.J. Heinz Co. are all involved in the auction, with Nestlé and Danone identified as the leaders in the bidding. Various analysts value the segment at close to $10 billion as an independent business.

Pfizer's animal health business, meanwhile, posted $3.58 billion in revenue in 2010 and produces treatments (vaccines, parasiticides and anti-invectives) for diseases in livestock and pets.

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Tags: animal health business | M&A | Pfizer Inc.

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Pfizer takes another step in restructuring

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