Tax, antitrust issues push Pfizer toward spinoff

We already know Pfizer plans to hive off its animal health operations. What we don't know yet is whether the drugmaker will sell off the unit, or spin it off. But the Wall Street Journal's sources now say that the company is leaning toward a spinoff, for tax and antitrust reasons.

Apparently, Pfizer has been telling potential bidders for the business that a spinoff is more likely than a sale. A Pfizer spokeswoman told the Journal that the choice will depend on "what generates the best after-tax value to our shareholders." The unit could bring $12 billion to $15 billion; its 2010 sales amounted to $3.6 billion.

The WSJ's sources said that Pfizer intends to keep the door open to a sale, even as it moves forward with preparations for a spinoff. The company would entertain offers, and, presumably, if a bid was large enough to generate more after-tax value for shareholders, then a sale it would be. But the usual auction-type sale is unlikely, those sources said.

It's not just dollar signs that's at issue, however. Antitrust problems could also inhibit a sale. Sanofi and Merck ran into antitrust issues with its planned animal-health joint venture; they ended up scuttling the deal.

The sale or spinoff is part of Pfizer's new effort to slim down and focus more tightly on its pharma business. The company also plans to divest its nutritionals business--that deal could bring $10 billion, analysts have said--but its consumer healthcare and generics businesses will stay within the Pfizer fold.

- read the WSJ piece