Zoetis Inc. (NYSE: ZTS), a spin-off of the animal health business of Pfizer Inc. (NYSE: PFE), held its initial public offering this morning. The company offered 86.1 million shares at $26 a share, $1.00 above the estimated range of $22 to $25. Pfizer will retain about 83% of the company’s stock, which would shrink to about 80% if underwriters exercise their overallotment options in full.

Zoetis will receive none of the $2.2 billion proceeds from the offering, all of which will go to a debt-for-equity exchanges with some underwriters to pay down Pfizer debt. Pfizer has also indicated that following the IPO it may distribute all or part of its stake in Zoetis to Pfizer shareholders in a tax-free distribution either as a one-time dividend or a share exchange, or possibly both.

The new company expects annual sales of around $4.2 billion and is the largest firm in the animal health industry. Some two-thirds of its sales come from products and services for livestock. The company has operations in 60 companies and competes with in-house animal health units of several big drugmakers, including Sanofi (NYSE: SNY), Eli Lilly and Co. (NYSE: LLY) and Merck & Co. (NYSE: MRK).

Shares of Zoetis are up nearly 19%, at $30.85 after hitting a high of $31.50 on the first morning of trading. Pfizer’s shares are up about 1.5% at $27.68, near the top of the stock’s 52-week range of $20.75 to $28.84.

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