Bill Ackman is going to the dogs, not to mention the cats and cows.
Shares of Zoetis (ZTS) closed at $43.72, rising 8.86% after the Wall Street Journal reported that the hedge fund titan had taken a $2 billion stake in the animal-health company and could push Zoetis to sell itself to a large drug maker.
Zoetis was spun off by Pfizer (PFE) in last year.
As the WSJ reports:
Ackman's Pershing Square Capital Management LP has built the stake, which amounts to roughly 10% of Zoetis, with fellow hedge fund Sachem Head Capital Management LP, the people said. Sachem Head is run by Scott Ferguson, a former protégé of Mr. Ackman.
A spokesman for Florham Park, N.J.-based Zoetis, which has a market value of about $20 billion, said the company got a call from Mr. Ackman regarding the investment, but declined to comment on it.
Zoetis makes vaccines and medications for livestock and house hold pets, generating $4.6 billion in sales last year. It is the largest player in the animal-health industry.
Citing unnamed sources, the WSJ reports that Ackman could be setting up Zoetis as a "a fallback plan" for Valeant Pharmaceuticals (VRX) if it fails to buy Allergan (AGN)
The WSJ reports:
The animal-health industry has been an active participant in the recent mergers-and-acquisitions boom. In April, Novartis AG agreed to sell its animal-health unit to Eli Lilly & Co. for $5.4 billion. The deal is expected to boost Lilly's position in the industry to No. 2 behind Zoetis.
Valeant Chief Executive Michael Pearson has said he has ambitions of tripling his company's size through acquisitions, and has indicated animal health is an area of potential interest.
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