Tuesday, September 24, 2013

The Motley Fool: Will 3 Versions Of Pfizer Be More Valuable Than 1?

Like many value-oriented investors, I tend to take a dim view of companies that resort to financial gymnastics to make their reported numbers look better or to get a better valuation from investors. With that said, I'm curious, and more than a little skeptical, as to whether Pfizer's (NYSE: PFE  ) long-term plan to potentially break itself up into three separate companies will really generate any long-term value for investors.

To be fair, Pfizer has already done a little bit of this already. The company spun off Zoetis -- the world's largest animal health company with almost 20% share -- earlier this year, and Pfizer's shares have outperformed the S&P 500 by about 5% since then while Zoetis has lagged (though Zoetis is up more than 20% if you take the IPO price as the starting point). Time will tell regarding the ultimate value created by this transaction, but freeing Zoetis to invest in R&D and market development as it sees fit ought to be a win-win for both parties.

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