IPO? In This Market?

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On Monday, Bristol-Myers Squibb (NYSE: BMY) said it's going ahead with its plan to spin off its Mead Johnson Nutrition business. This doesn't seem like the best market in which to register for an initial public offering, but perhaps Bristol-Myers is expecting a better market by the time the IPO is completed in the first half of next year.

Mead Johnson Nutrition sells baby formula, including Enfamil, and supplements for pregnant and nursing moms. Sales clocked in at $2.48 billion last year, making up about 13% of Bristol-Myers' sales.

It plans to keep 80% to 90% of the shares from the IPO, so it'll still be in full control of the business. That's in stark contrast to how it handled its medical-imaging and wound care businesses -- those were completely sold in recent months.

Different pharmaceutical companies have taken different paths to dealing with their coming patent cliffs. Like Bristol-Myers, Pfizer (NYSE: PFE) has become more of a pharmaceutical company by selling off its consumer health care division to Johnson & Johnson (NYSE: JNJ). At the other extreme, Novartis (NYSE: NVS) seems to be diversifying by getting into generic drugs and more recently acquiring a stake in ophthalmology specialist Alcon (NYSE: ACL).

One thing is for certain: Bristol-Myers could use the cash. From its small purchases of Kosan Biosciences and Adnexus Therapeutics to its $60 per share offer for ImClone Systems (Nasdaq: IMCL) that might or might not go higher, Bristol-Myers could use as much cash as it can get its hands on to boost its pipeline. Of course, the ImClone deal might fall through, depending on any bid by the "mystery" contender. However, in a truly Foolish manner, Bristol-Myers' CFO, Jean-Marc Huet, said just yesterday while discussing the matter, "You should never fall in love with an asset."

A partial spin-off IPO of the baby and infant product line is a reasonable plan, assuming the market wants to buy the shares. It allows Bristol-Myers the flexibility to sell further portions at a later time to raise more cash if needed. It might even be able to sell the shares at a premium either now or later. What's more recession-proof than baby formula?