In a spin-off, the parent company (ParentCo) distributes to its existing shareholders new shares in a subsidiary, thereby creating a separate legal entity with its own management team and board of directors. The distribution is conducted pro-rata, such that each existing shareholder receives stock of the subsidiary in proportion to the amount of parent company stock already held. No cash changes hands, and the shareholders of the original parent company become the shareholders of the newly spun company (SpinCo).
In a split-off, the parent company offers its shareholders the opportunity to exchange their ParentCo shares for new shares of a subsidiary (SplitCo). This tender offer often includes a premium to encourage existing ParentCo shareholders to accept the offer. For example, ParentCo might offer its shareholders $11.00 worth of SplitCo stock in exchange for $10.00 of ParentCo stock (a 10% premium).
pfe has NOT called the zts offer a "spinoff". they called it a split-off. here's the release they made as reported by business wire:
Pfizer Inc. (PFE) today announced its intention to split off its remaining interest in Zoetis Inc. (ZTS), through an exchange offer. Zoetis, formerly Pfizer’s animal health business, completed its initial public offering (IPO) in February 2013. In the exchange offer, Pfizer shareholders can exchange all, some or none of their shares of Pfizer common stock for shares of Zoetis common stock owned by Pfizer. The exchange offer is anticipated to be tax-free for participating Pfizer shareholders in the United States, except with respect to cash received in lieu of a fractional share. The completion of the full separation of Zoetis is expected to be accretive to Pfizer’s earnings per share beginning in 2014.
as i said days ago: this is a stock buyback using the zts shares as currency.
p.s. things aren't helped any by news organizations such as dow jones MISTAKENLY calling it a spin-off.