9:47 a.m. CDT, March 12, 2012 LONDON (Reuters) - Pfizer Inc is more likely to spin off its animal health unit than sell it outright, reflecting the expected investor appeal of such a large standalone business, its chief executive said on Monday.
No final decision has been taken but Ian Read told Reuters there were clear attractions for shareholders in a tax-free spinoff of the operation, which is the biggest in the industry.
"I would probably handicap animal health as more likely to be a spin than a sale," the CEO of the world's biggest drug maker said in an interview in London.
Read, who took over as Pfizer chief in December 2010 at a challenging time, is shrinking the group by divesting non-core businesses, including veterinary medicine and infant nutrition.
The process for animal health, however, is less well advanced and the case for a sale less obvious. Pfizer faces a hefty tax bill if it sells outright and any buyer would also faces substantial antitrust hurdles.
"It's the largest animal health business and it would stand alone as an individual company. There's huge interest among investors to own a company like that," Read said.
"With nutritional there are lots of companies that are already in the nutritional business and have it as a major development area."
Speculation about a possible sale of animal health, which analysts believe could be worth $15-20 billion, was fuelled last week by reports that Novartis AG (NOVN.VX) had made an approach that was rebuffed by Pfizer, while Bayer AG (BAYGn.DE) was also weighing a move.
The plans to dispose of both units, which Pfizer has said would be completed between July 2012 and July 2013, follows a far-reaching review and a decision to focus on core pharmaceutical operations.
The outcome of that review was to concentrate on five core areas of drug research, while maintaining a strong presence in generic and OTC medicines.