What is a 'Right' and how do I get one?

A 'Right' is a warrant that gives you the option to buy a fraction of Zoetis's Series A Junior Participating Preferred Stock. You will automatically receive one Right for each share of Zoetis common stock you own as of the close of business on November 24, 2014. Initially, these Rights are attached to your existing stock certificates or book-entry accounts.

What is the purpose of this shareholder rights plan?

The primary purpose is to act as an anti-takeover defense. It is designed to prevent any individual or group from acquiring a significant stake (15% or more) in Zoetis without the approval of the Board of Directors. This gives the Board time and leverage to negotiate any potential takeover offers and ensure they are in the best interest of all shareholders.

When do these Rights become exercisable?

The Rights are not exercisable immediately. They will separate from the common stock and become exercisable ('Distribution Date') on the earlier of 10 business days after a public announcement of a 15% stake acquisition (or commencement of a tender offer that would result in this) or other specified events. The Rights will expire on November 16, 2015, unless redeemed or exchanged earlier by the Board.

Will this plan affect my current stock ownership or dividends?

Initially, no. Until the Rights are triggered and become exercisable, you continue to own your common stock as usual and will receive any dividends declared on that stock. The Rights themselves do not grant voting rights or the right to dividends until they are exercised. The distribution of the Rights itself is not taxable, but potential tax implications may arise if the Rights become exercisable or are redeemed under certain circumstances.

ZTS 8-K: Material Agreements, Shareholder Matters & More

Summary

On November 17, 2014, Zoetis Inc. (ZTS) filed an 8-K report detailing the adoption of a shareholder rights plan, commonly known as a 'poison pill'. This plan involves declaring a dividend of one 'Right' for each outstanding share of common stock, effective for shareholders of record on November 24, 2014. Each Right allows the holder to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock at $200.00 per unit. The primary purpose of this Rights Agreement, established with Computershare Trust Company, N.A., is to serve as an anti-takeover measure. The Rights are designed to become exercisable and potentially dilute the ownership stake of any individual or group that acquires 15% or more of Zoetis's outstanding common stock without the Board's approval. This aims to protect shareholder value by preventing coercive takeover tactics and allowing the Board time to negotiate a potentially better offer for all shareholders.

Key Highlights

1Zoetis Inc. has adopted a shareholder rights plan (poison pill) as of November 14, 2014.
2A dividend of one Right per common share is declared for shareholders of record on November 24, 2014.
3Each Right entitles the holder to purchase a fraction of a Series A Junior Participating Preferred Stock unit at $200.
4The plan is triggered if an 'Acquiring Person' accumulates 15% or more of the company's outstanding common stock.
5Upon triggering, Rights held by the Acquiring Person become void, while other Rights allow purchase of Zoetis stock at a discount or acquisition company stock in certain merger scenarios.
6The Board retains the right to redeem the Rights for a nominal amount ($0.001 per Right) before a triggering event.
7The primary stated purpose is to deter hostile takeovers and protect shareholder value by providing the Board with negotiation leverage.

Zoetis Inc. 8-K Report, Material Agreement (Nov 17, 2014)

Summary

Key Highlights

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