Owners of Pfizer (PFE 2.40%) stock have an animal of a decision to make. The pharma giant is giving shareholders a chance to exchange Pfizer stock for shares in Zoetis (ZTS -4.32%), its former animal health business that was spun out in February. Pfizer still owns 80% of Zoetis but is willing to give its shares away to its current shareholders in exchange for retiring Pfizer stock.

Investors certainly don't want to feel like a fish out of water owning a new company, and sometimes a bird in the hand is worth two in the bush.

On the other hand, investors shouldn't look a gift horse in the mouth, especially one that may be the bee's knees.

Curiosity may have killed the cat, but let's chew the cud and take a look at what investors should do with their Pfizer stock. And I'll hold my horses with the animal sayings so we can get through the details.

If investors decide to exchange their Pfizer shares, they'll receive about $107.52 worth of Zoetis shares for every $100 worth of Pfizer shares, although there's a limit of 0.9898 shares of Zoetis stock per share of Pfizer stock. The values will be determined by the average price of the three days before the deal closes on June 19 after the closing bell.

Don't count your chickens before they hatch
The 7% discounts sounds like a good deal, but you have to want to own shares of Zoetis to justify making the exchange. There's no telling what Pfizer shares or Zoetis shares are going to do after the exchange before you might have a chance to sell them. If Pfizer is able to exchange all its shares, it's possible investors will be so happy to have gotten rid of Zoetis that they'll bid up the shares, negating the discount.

Zoetis looks like a solid company. Sales in the first quarter were up 5% year over year, which topped the 4% growth Merck (MRK 0.44%) saw with its animal health division and solidly trumped Elanco, Eli Lilly's (LLY -2.63%) animal health division, which saw sales up just 2%.

Being the largest animal health company, Zoetis should have some operational efficiencies that aren't available to Merck, Eli Lilly, Bayer, and Sanofi. And it's really the only choice if you want to specifically tap the animal health care market. The animal health divisions are tiny parts of the pharmaceutical companies overall revenue, so they're not likely to move the needle at Merck, Eli Lilly or one of the other larger players.

Pfizer is as happy as a clam
Pfizer isn't doing the exchange out of the goodness of its heart. The company said that a full exit from Zoetis would be accretive to Pfizer's earning per share starting next year.

The exchange will remove Zoetis' earnings that flow through Pfizer's financial statement, but it'll also lower the number of shares outstanding since the Pfizer stock has to be turned in to get shares of Zoetis. The exchange reduces the "per share" in the EPS and increases the earnings by reducing the dividend that doesn't have to be paid on the retired Pfizer stock.

Barking up the wrong tree
This doesn't have to be an all or nothing situation. If you want to own Zoetis, which looks potentially more stable than Pfizer although perhaps with slower growth, consider trading in just some of your Pfizer stock and own both companies.