Mead Johnson is spun off by Bristol-Myers

Chain Drug Review, March 2, 2009

NEW YORK -- Mead Johnson Nutrition Co.'s stock opened for trading on the New York Stock Exchange last month and rose 10% in its opening day.

The $720 million initial public offering was part of the spin-off of Mead Johnson from former parent company Bristol-Myers Squibb Co., which acquired it in 1967. Bristol-Myers retains an 85% stake in the newly independent company.

Evansville, Ind.-based Mead Johnson reported revenue of nearly $2.9 billion in 2008. It specializes in pediatric nutrition and is best known for Enfamil infant formula.

James Cornelius, chairman and chief executive officer of Bristol-Myers and chairman of Mead Johnson, called the IPO an important milestone for both companies.

"We believe the initial public offering of Mead Johnson will allow it to maximize the value of its brand by implementing growth plans and increasing shareholder value, while providing Bristol-Myers Squibb with a steady source of profits, cash flow and growth," Cornelius said. "The offering also allows Bristol-Myers Squibb to further strengthen its capital structure as well as increase its focus on the biopharma business portfolio, fulfilling yet another part of the health care business strategy we announced just over one year ago."

Bristol-Myers decided last spring to spin off Mead Johnson as part of a strategy of shifting its attention away from noncore businesses and toward biopharmaceuticals.

Mead Johnson said in its prospectus filing with the Securities and Exchange Commission that children's nutrition is a $19 billion global industry, with the market for infant formula accounting for about $14 billion of that figure.

Mead Johnson sold 30 million shares, about 5 million more than originally expected.

The IPO, which occurred on February 11, was significant for the New York Stock Exchange. Mead Johnson was the first major company in the United States to go public in 2009 and represented the largest U.S. IPO since American Water Works listed on the NYSE in April 2008.

"As the first major IPO in 2009, Mead Johnson demonstrates that great companies can raise money, go public and list on our markets even in challenging market conditions," said Scott Cutler, executive vice president at NYSE Euronext.

Mead Johnson CEO Stephen Golsby rang the opening bell at the exchange to mark the IPO and the company's first day of trading.