Zoetis to sell medicated feed additive portfolio to Phibro Animal Health

PARSIPPANY, N.J. & TEANECK, N.J.–(BUSINESS WIRE)–Zoetis Inc. (NYSE: ZTS) and Phibro Animal Health (NASDAQ: 🙂 Corporation (Nasdaq: PAHC) today announced that it has entered into a definitive agreement for Phibro Animal Health to acquire Zoetis' portfolio of medicated feed additives (MFA), certain water-soluble Products and related assets, the specific transaction amount needs to be adjusted according to convention. The transaction is expected to close in the second half of 2024.

This press release uses multimedia. View the full version here: https://www.businesswire.com/news/home/20240428775498/en/

Zoetis and Phibro Animal Health both have long-standing commitments to the animal health industry. The acquired product portfolio consists of more than 37 product lines sold in approximately 80 countries and will generate approximately $400 million in revenue by 2023. The agreement also includes six production sites, four in the United States, one in Italy and one in China. More than 300 Zoetis associates supporting manufacturing, distribution and commercial activities are expected to transition to Phibro Animal Health.

This transaction reflects Zoetis' disciplined capital allocation strategy, focusing investments on animal health, productivity and sustainable solutions. The divestment will allow Zoetis to focus its livestock investments on other solutions, including vaccines, biologics and genetic programs.

“We remain committed to providing innovative solutions to our livestock customers,” said Kristin Peck, CEO of Zoetis. We are confident that Phibro Animal Health will fully realize the long-term value of the transferred product portfolio and the company will continue to expand its footprint given its strong relationships with customers around the world.

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Zoetis' strong portfolio of MFA and water-soluble products for cattle, swine and poultry will complement and expand Phibro Animal Health's species and product portfolio, helping customers meet the highest standards of animal care, prevent disease and enhance nutrition. On a combined basis with acquisitions, Phibro Animal Health had sales of approximately $1.4B in the last 12 months. The portfolio is expected to improve Phibro Animal Health's profitability and EBITDA margins and increase its adjusted earnings per share. The acquisition is expected to be financed primarily through debt, and Phibro Animal Health has secured financing commitments from a number of major relationship banks. Phibro Animal Health expects net leverage at closing to be 3.5x-4.0x debt/adjusted EBITDA and plans to keep net leverage below 3.0x by the fiscal year ending June 30, 2027.

Jack C. Bendheim, chairman, president and chief executive officer of Phibro Animal Health, said Zoetis has long established a global source of valuable, high-quality and reliable pharmaceutical feed additives. This investment will enhance, diversify and expand our global portfolio and help us continue to create value for our clients and shareholders. We believe the cash we generate will allow continued investment in our high-growth businesses, namely nutritional specialty products, companion animals and vaccines businesses. I believe we have sufficient capabilities to integrate and strengthen this business. I look forward to working with the Zoetis team and welcoming new colleagues to Phibro Animal Health to support the portfolio.

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Zoetis and Phibro Animal Health will work closely with colleagues and customers to ensure a smooth transition and continued supply of these important products.

Guggenheim Securities, LLC is serving as exclusive financial advisor to Zoetis, and Wachtell, Lipton, Rosen & Katz is serving as legal advisor. Citigroup is serving as exclusive financial advisor to Phibro, and Kirkland & Ellis LLP is serving as legal advisor.

Phibro Animal Health will host an investor conference call on April 29 at 8:30 AM. Interested parties are welcome to listen to the conference call and view the presentation slides by visiting https://investors.pahc.com. You can also discuss this by calling +1 (888) 596-4144 (U.S. and Canada) or +1 (646) 968-2525 (international calls). Provide meeting ID 6159146.

You can access the live audio webcast through Phibro's investor relations website at https://investors.pahc.com. Conference call slides will be posted to the website in advance of the call.

About Zoetis

As the world's leading animal health company, Zoetis has one purpose: to nurture our world and people by promoting animal care. For more than 70 years, Zoetis has been innovating ways to predict, prevent, detect and treat animal diseases and continues to support the people who raise and care for animals around the world, “from veterinarians and pet owners to livestock farmers and ranchers.” The company's leading portfolio and pipeline of medicines, vaccines, diagnostics and technologies are used in more than 100 countries. Zoetis is a Fortune 500 company with 2023 revenue of $8.5 billion and approximately 14,100 employees.For more information, please visit www.zoetis.com.

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About Phibro Animal Health

Phibro Animal Health is a leading global diversified animal health and nutrition company. We strive to be a trusted partner to livestock producers, farmers, veterinarians and consumers who raise or care for farm and companion animals, providing solutions to help them maintain and enhance the health of their animals. For more information, please visit www.pahc.com.

forward-looking statements

This press release contains forward-looking statements that reflect Zoetis' and Phibro's current views regarding their business plans or prospects, future operating or financial results, the proposed sale of Zoetis' medicated feed additive (MFA) product portfolio, and certain water-soluble additives. , and other future events. These statements are not guarantees of future performance or actions. Forward-looking statements are subject to risks and uncertainties, including uncertainty as to when or whether the proposed transaction will be completed; risks related to the impact or terms of the potential transaction; risks related to the benefits and costs of the proposed transaction, including the proposed The risk that the expected benefits of the transaction will not be realized in full or at all within the expected period, and that the conditions of the potential transaction will not be satisfactory and/or that the potential transaction will not be completed within the expected time frame, on the expected terms, or at all; and the risk that the proposed the risk that any consents or regulatory or other approvals in connection with the transaction will not be received or obtained within the expected timeframe, on the terms expected, or at all; the risk that financing designed to fund the proposed transaction may not be obtained; the risks associated with the proposed transaction the risk that costs will exceed Zoetis' or Phibro's estimates or otherwise adversely affect their business or operations; the impact of the proposed transaction on their respective businesses and the risk that completing the proposed transaction may be more difficult, time-consuming or more costly than anticipated, including The impact on their respective resources, systems, procedures and controls, the diversion of management's attention and the impact on relationships with customers, government agencies, suppliers, employees and other business counterparties. There can be no assurance that the proposed transactions will actually be completed in the manner described or at all. If one or more of these risks or uncertainties materialize, or if the underlying assumptions of Zoetis or Phibro management prove incorrect, actual results may differ materially from those anticipated in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Zoetis and Phibro expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in Zoetis' and Phibro's respective most recent annual reports on Form 10-K, including the section titled Item 1A. Risk Factors, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These filings and subsequent filings are available online at www.sec.gov, www.zoetis.com or www.pahc.com, as applicable, or upon request by Zoetis or Phibro, as applicable.

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ZTS infrared

Zoetis media contact:
Janelle Alonso
1-973-945-4333 (o)

Laura Panza
1-973-975-5176 (o)

Zoetis investor contact information:
Steve Frank
1-973-822-7141 (o)

nixon sangchai
1-973-443-2792 (o)

Phibro Animal Health Contact Information
Glenn David
chief financial officer

source: Zoetis Corporation (New York Stock Exchange:).

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