Question For 'Long Term' Pfizer And/Or Eli Lilly Shareholders

[ownyourfuture]

I understand Pfizer did a spin-off of its animal business under the name Zoetis Inc. in 2013. Did you receive shares of the spin-off ?

I own Eli Lilly (LLY) & in late July, they announced they will spin off the animal-health unit Elanco.
https://www.bloomberg.com/news/artic...against-a-sale

It was very difficult to reach investor relations, & when I did, the spokesperson made it sound like LLY shareholders wouldn't receive shares in new company ?
I've been involved in many stock mergers/acquisitions, but never one of these.

[Freedom56]

Quote:

Originally Posted by ownyourfuture I understand Pfizer did a spin-off of its animal business under the name Zoetis Inc. in 2013. Did you receive shares of the spin-off ? I own Eli Lilly (LLY) & in late July, they announced they will spin off the animal-health unit Elanco. https://www.bloomberg.com/news/artic...against-a-sale It was very difficult to reach investor relations, & when I did, the spokesperson made it sound like LLY shareholders wouldn't receive shares in new company ? I've been involved in many stock mergers/acquisitions, but never one of these.

With respect to Pfizer, shareholders were given the option of keeping their Pfizer shares or convert them to Zoetis at a ratio of 1 to 1.07 back in 2013.

https://www.reuters.com/article/us-p...94L0JB20130522

I don't own their common stock but used to own their bonds.

[ownyourfuture]

Quote:

Originally Posted by Freedom56 With respect to Pfizer, shareholders were given the option of keeping their Pfizer shares or convert them to Zoetis at a ratio of 1 to 1.07 back in 2013. https://www.reuters.com/article/us-p...94L0JB20130522 I don't own their common stock but used to own their bonds.

Thanks for the reply Freedom, but here's what I'm still having trouble understanding.

I'm a Lilly shareholder, & if I understand it correctly, at least up until this time, Elanco Animal Health is/was part of that company. In the last quarterly earnings report, the following was stated. • Elanco Animal Health to be 'separated' through initial public offering.

If they’re going to ‘separate’ part of a company I already own, shouldn’t I be compensated ?

I know someone who works for Hewlett Packard. His company has split & had spin-offs. Here’s what he said when I asked about this.

“when HP split in November 2015, I ended up with the same number of HP shares I had before the split and the same number of Hewlett-Packard enterprise shares as HP shares. Of course the combined value of both company shares was the same value as the HP shares were before the split. That might be a little different than an actual spin off. There have been at least two more spinoffs from HPE and for each of those spinoffs I received a fraction of a share of the new company for each share of HPE "

The last sentence is key. I don't want to, but I suppose I'll have to call investor relations again.

[Freedom56]

Quote:

Originally Posted by ownyourfuture Thanks for the reply Freedom, but here's what I'm still having trouble understanding. I'm a Lilly shareholder, & if I understand it correctly, at least up until this time, Elanco Animal Health is/was part of that company. In the last quarterly earnings report, the following was stated. • Elanco Animal Health to be 'separated' through initial public offering. If they’re going to ‘separate’ part of a company I already own, shouldn’t I be compensated ? I know someone who works for Hewlett Packard. His company has split & had spin-offs. Here’s what he said when I asked about this. “when HP split in November 2015, I ended up with the same number of HP shares I had before the split and the same number of Hewlett-Packard enterprise shares as HP shares. Of course the combined value of both company shares was the same value as the HP shares were before the split. That might be a little different than an actual spin off. There have been at least two more spinoffs from HPE and for each of those spinoffs I received a fraction of a share of the new company for each share of HPE " The last sentence is key. I don't want to, but I suppose I'll have to call investor relations again.

As in the case of Pfizer, the proceeds of the IPO would go to Lilly so you indirectly benefit (sort of). I don't know all the details of this deal.
I really don't bother with common stocks. Look at Pfzer as an example. In 2000 it was trading at $44-45. I had their bonds at that time that were paying over 7.2%. Around mid 2000 they cut their dividend in half, and many drugs were going off patent. The stock dropped to $11. I continued to collect my 7.2% and when the bond matured I got 100% of my principal returned. Meanwhile common shareholders had to wait a decade to break even to the back to the 2000 high. I can make the same argument with GE. I never bought the common stock, but I own their bonds and notes and have had coupons ranging from 7.25% to 6.75% over the past 18 years. Look where the common stock has gone over the past 18 years. I have one GE issue left that matures in 2022.

[jazz4cash]

I can't speak to these stocks specifically, but as was stated for HP, I have sometimes received a direct benefit from a stock spin-off (e.g. Brighthouse Financial was spun out of Metlife) while other times no direct benefit to current shareholders was offered to current shareholders. It just depends on how they choose to treat the transaction. Usually shareholders get to vote on these things, but corporate governance being what it is, it's pretty much a rubber stamp for whatever the board wants. It's no different than the sale of any other asset...the shareholders may or may not receive a dividend payment based on the revenue generated.

[ownyourfuture]

ATTN: Freedom
As in the case of Pfizer, the proceeds of the IPO would go to Lilly so you indirectly benefit (sort of).
Never thought of it that way.

I really don't bother with common stocks. Look at Pfzer as an example. In 2000 it was trading at $44-45. I had their bonds at that time that were paying over 7.2%. Around mid 2000 they cut their dividend in half, and many drugs were going off patent. The stock dropped to $11. I continued to collect my 7.2% and when the bond matured I got 100% of my principal returned. Meanwhile common shareholders had to wait a decade to break even to the back to the 2000 high.

Sounds like you did very well with those bonds. What's ironic, is that apparently, LLY performed similarly to PFE during that time. Recently,on the yahoo message board, a long time LLY shareholder stated that "LLY has been dead money since the 90's"

But that's where timing comes in. Call it dumb luck if you want, but I bought my shares in Jan 2011, & now have almost 20k in unrealized cap. gains & have also taken about 4k in cash dividends.

Thanks for the input on this thread.

[ownyourfuture]

ATTN: jazz4cash

Usually shareholders get to vote on these things, but corporate governance being what it is, it's pretty much a rubber stamp for whatever the board wants.

In this case, we weren't allowed to vote. So definitely a rubber stamp!
Thanks for the input

[Koolau]

IIRC LLY has sold other operational units in the past. Also, IIRC, stock was not an issue. Since these units were wholly owned, it is no different than selling product as it relates to stock holders. Hopefully, LLY becomes more valuable to stock holders as a result of such moves. YMMV