US pharmaceutical giant Bristol-Myers Squibb Co. plans to spin off baby formula group Mead Johnson Nutrition.

In an announcement yesterday (15 November), Bristol-Myers said it expects the split-off to be a tax-advantaged way to further deliver value to its shareholders.

Bristol-Myers Squibb shareholders can exchange some, none, or all of their shares of Bristol-Myers Squibb common stock for shares in Mead Johnson at a discounted rate.

For each $1.00 of Bristol-Myers Squibb common stock accepted in the exchange offer, the tendering shareholder will receive approximately $1.11 of Mead Johnson common stock.

As part of the exchange offer, Bristol-Myers Squibb will convert all of its Mead Johnson class B common stock into Mead Johnson class A common stock. Upon the completion of the exchange offer, only Mead Johnson class A common stock will remain outstanding.

The split-off is expected to be net cash flow positive to the BioPharma business and accretive to EPS beginning in 2010.

"This marks the latest step in our company's transformation into a BioPharma leader," said James Cornelius, chairman and CEO of Bristol-Myers Squibb.

Cornelius said that now was the "right time" to spilt-off Mead Johnson given its "excellunt performance" following its IPO earlier year.

At the end of October, Mead Johnson hailed a "solid performance" when it posted a 13% jump in earnings for the first nine months of the year.