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After Kraft's Mohn-dah-LEEZ, Prepare for Pfizer's zô-EH-tis

NEW YORK ( TheStreet) -- Shareholders bracing for spinoffs among Dow Jones Industrial Average components also should brush up on their phonetics.

After Kraft Foods (KFT) employees invented the name Mondelez Mohn-dah-LEEZ for the company when it IPOs its snacks unit, Pfizer (PFE - Get Report) said on Thursday that it is preparing an initial public offering of its animal health unit under the name Zoetis zô-EH-tis . Pfizer is preparing to spin the unit in a continued push to focus the world's largest drug maker on its pharmaceutical business.

In April, Pfizer made a first big step in streamlining its assets by selling its baby nutrition unit to Nestle for $11.85 billion, after CEO Ian Read outlined plans to consolidate the New York-based drugs giant in mid-2011. By selling and spinning non-drugs related assets, Pfizer is attempting to buy back shares and reinvest in its drugs research and development efforts as some blockbuster drugs like Lipitor go generic.

Pfizer said it expects to provide details regarding the proposed animal health unit IPO as part of its 2012 second quarter earnings announcement.

"Pfizer Animal Health is a dynamic business with strong fundamentals, an expanding and loyal direct customer base and a proven management team," said Pfizer CEO Read in a Thursday statement.

Read also echoed commitment to launch share buybacks with the proceeds of a prospective sale. "Our focus continues to be on taking the actions that will generate the greatest after-tax value for our shareholders, with share repurchases remaining the case to beat in allocating cash proceeds from the separation."

As a standalone, Zoetis will be a leader in animal vaccines, medicines and testing equipment, with over 9,000 employees globally and $4.2 billion in 2011 revenue. In April, Bank of America Merrill Lynch analyst Gregg Gilbert said that if Pfizer's animal health unit were to be divested at a similar price-to-sales multiple as the baby nutrition business bought by Nestle, it could be valued at $16 billion and add a further 7% upside to Pfizer's 2013 EPS.

" Pfizer has a number of catalysts in 2012 that have the potential to significantly influence its valuation," wrote Gilbert, citing the animal health unit sale, FDA action on a stroke prevention drug called Eliquis and the possible approval of tofacitinib for rheumatoid arthritis. He rates shares a buy with a $25 price target.

In April, The Wall Street Journal reported that Pfizer might hire JPMorgan, Bank of America and Morgan Stanley to lead an initial public offering of its animal vaccine unit. Pfizer said on Thursday that it expects a spinoff by July 2013 and that it may file a registration statement for the IPO in its second quarter earnings announcement.

While the spinoff will raise cash and streamline Pfizer's business, some analysts have recently questioned the value of Pfizer's previous share buyback attempts. "Our analysis of US large-cap pharma's historic buyback programs indicate that PFE's share repurchases have the lowest return when compared with other US large-cap pharma's," wrote Citigroup analyst John Boris in a late May note to clients.

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