Zoetis hikes dividend under continued pressure from activist investor Ackman

Ever since Pershing Square's William Ackman bought up $1.5 billion worth of Zoetis' ($ZTS) shares in mid-November, the animal health giant has been under pressure to do more to increase shareholder value--including possibly putting itself up for sale. That may be why the company declared on Wednesday that its first-quarter 2015 dividend would be 8.3 cents per share, marking a 15% increase over this year's dividend rate.

Zoetis CEO Juan Ramón Alaix

In a press release, Zoetis CEO Juan Ramón Alaix said that with the dividend hike, along with a recently announced share-repurchase program, Zoetis continues "to demonstrate the strength of our business model and deliver our long-term value proposition, including returning capital to our shareholders."

The dividend, which will be payable March 3, came in slightly higher than the 8 cents per share analysts were expecting, according to data compiled by Bloomberg. Ackman has not explicitly laid out his plans for pushing for change at Zoetis, but dividend increases and share buybacks are common demands from activist shareholders.

Ackman created quite a stir when he teamed up with Sachem Head's Scott Ferguson to build a roughly 10% stake in Zoetis. Then, one week later at the company's first Investor Day, Ackman reportedly griped during a private session with investors that Zoetis's costs were too high.

During the Investor Day event, Alaix and several other top Zoetis executives laid out an ambitious set of plans to boost the company's market presence in both companion animal health and livestock production. They also disappointed investors, however, with the estimate that Zoetis' 2015 sales will grow no more than 8.5% to between $4.85 billion and $4.95 billion. The company predicted that 2015 earnings per share will come in between $1.61 and $1.68, but analysts had been hoping for $1.71.

Rumors that Ackman plans to pressure Zoetis to put itself up for sale to a pharma company such as Valeant ($VRX) continue to persist. Just after Ackman bought up his shares, Zoetis responded adopting a one-year shareholder rights plan--better known as a poison pill--to foil any possible hostile takeover attempt.

- here's the press release
- read more at Bloomberg

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