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Pfizer in advanced stages to sell off animal health and infant nutrition businesses | Deal Insight

Pfizer’s Animal health business has a 19% share of market and is so profitable that industry leader Bayer would have purchased it at a tad lower than $19 bln. However the company Pfizer is een on getting rid off the division thru a less expensive spin off by first ccreating a $3 bln IPO for the division and then completing the spin off when the tax hit on its balance sheet will not befelt as the company books its sale on the then shareholders’ .

Thus the company could choose anything between a 25-75% stake in the final business after a 20% IPO of the division lists it uniquely and bidders like Bayer or

English: Logo of Pfizer Incorporated.

Image via Wikipedia

Public shareholderrs can be probably expanded.

Similarily, Pfizer’s infant nutrition business with $2 bln in annual sales could also be worth $10 bln to investors, the sale of the infant nutrition business also in line with the return to core strengths for the drug conglomerate. Nestle Danone and Chinese Menginu Dairy would be bidding for the business with the current auction being handled by JP Morgan and Centerview. Danone is being advised by Lazard and JP Morgan, while Nestle is being advised by Rothschild. Its infant food division is #5 in China raising likely anti trust verification concerns if and when the deal is allowed ahead of others’ bids irrespective of whether the deal is won by Chinese or European bidders.

Pfizer

Pfizer (Photo credit: Walt Jabsco)

Pfizer made discussions of sale public in the 2nd half of last eyar when the deal environment soured with falling fees and deal volumes. Meanwhile Bayer that generates EBITDA of $10 bln, has expressed interest in bidding for the business whose price tag of $20 bln could be justified by its $3.6 bln standalone sales in over 60 countries. However Bayer already carries a lot of debt and a cash transaction is likely to suit Pfizer’s interests as it invests in a research pipeline and tries to acquire new drugs to replace its going off patent sales of more than $12 bln

Spinoffs have been successful in the last two years, investors ready to value botht he original business and the new entity more liberally as a non conglomerate, even as companies like Google end up a conglomerate to look for a new core competency and bite the competition.

The two divisions could easily net JP Morgan deal fees of upto $2 bln by US rates, though in Asia a deal of the same magnitude may have earned anywhere between $500 mln to $1 bln, as Faceboo is squeezing its merchant bankers/underwriters, Morgan Stanley, JP Morgan and (Lead right) Goldman Sachs.

We previewed the new Pfizer in 2010 for a background note thus even as it opened the doors to restructuring and consolidated its R&D. Our stories on big pharma in 2010 and the new deal environemnt led by healthcare , here, here and here

Our note on Nestle

 

 

 

 

 

 

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This entry was posted on February 19, 2012 by in Dealbook, Healthcare and tagged , , , , , , , , , .

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