Pfizer has finally confirmed that rather than selling its animal heath business, it will set up a new standalone company out of the division, to be called Zoetis.

The drugs giant said that preparations are underway to file an initial public offering of a minority stake in the new entity. Zoetis will have more than 9,000 employees and operations in more than 120 countries; revenues in 2011 were $4.20 billion and the new business will be up and running by July 2013.

Last July, Pfizer said it was looking at alternatives for its animal health operations, including a sale, though most observers thought an IPO was indeed most likely. However it did divest its nutrition business to Nestle in April, pocketing $11.85 billion.

How much of a stake the company intends to offer in Zoetis will be disclosed in the next month or so, and rumours of a 20% spin-off are doing the rounds. Analysts have valued Pfizer's animal health operations at around $15 billion.

Pfizer chief executive Ian Read said animal health is "a dynamic business with strong fundamentals, an expanding and loyal direct customer base and a proven management team". He added that “our focus continues to be on taking the actions that will generate the greatest after-tax value for our shareholders", noting that there will be "share repurchases remaining the case to beat in allocating cash proceeds from the separation".