Ackman Takes $2 Billion Stake In Zoetis

November 12, 2014

By Mark Terry, BioSpace.com Breaking News Staff

New York-based Pershing Square Capital Management LP, led by infamous activist investor Bill Ackman, announced yesterday that it had acquired an 8.5 percent stake in global animal healthy company Zoetis Inc . Zoetis, headquartered in Florham Park, N.J., develops and markets drugs and vaccines for animals, as well as offers complementary diagnostic products, genetic tests and services.

Pershing Square acquired about 41.8 million shares. At the same time, Sachem Head Capital Management LP, in partnership with Pershing, acquired about 1.6 percent of Zoetis shares. Zoetis indicated it has scheduled a meeting with investors for November 18.

“We look forward to sharing more details about the company’s business model and growth strategies with the investment community at that time,” Zoetis said in a statement.

It’s unclear what Pershing Square plans to do with its stake. There is some speculation that Ackman could use his new clout with the company to force it to sell itself to other companies that have animal-health businesses, such as Bayer AG , Merck & Co. , and Eli Lilly & Co .

Pershing Square has been embroiled in a hostile takeover bid for Botox developer Allergan Inc. (Irvine, Calif.). As a result of this acrimonious bid, the SEC is investigating Pershing Square and Valeant Pharmaceuticals International , located in Laval, Quebec, for insider trading. In March 2013 Pershing Square bought up 10 percent of Allergan stock. A month later Valeant and Pershing Square announced a joint bid to acquire Allergan, causing the stock to jump 15 percent, providing Pershing with $1 billion in gains.

As a result of Pershing Square’s acquisition of Zoetis stock, the shares rose 8.86 percent to $43.72 per share by end of trading yesterday. Ackman now has about $2 billion invested in the company.

Further speculation suggests that Ackman might now push for Zoetis to be acquired by Valeant. Valeant’s CEO Mike Pearson has previously expressed an interest in animal health. In a February conference call he said, “We think, in a sense, it’s branded generic products sold directly to the physicians and it’s consistent with sort of the buy-and-build model that we like. But obviously we have to find an asset at the right price because we will not overpay for anything.”

But Valeant has shown it will buy a lot of things: Since 2008 Valeant has acquired more than 100 smaller companies. Its focus is on dermatology, eye health, aesthetics, consumer products, neurology and oral health.