Source: Zoetis

What: Shares in Zoetis (NYSE:ZTS) slumped by more than 10% earlier today after CNBC's David Faber tossed cold water on acquisition rumors that sent shares up more than 10% yesterday afternoon.

So What: Rumors of a potential acquisition have been swirling around Zoetis ever since activist investor Bill Ackman took a stake in the animal health company last year.

Yesterday, reports that Valeant Pharmaceuticals International (NYSE:BHC), a key holding in Ackman's Pershing Square hedge fund, was kicking Zoetis' tires propelled Zoetis' shares 12% higher; however, hopes of a looming offer were a bit dashed today when CNBC reported that Valeant's interest in Zoetis was more of a courtesy call and that Valeant was unlikely to make Zoetis an offer.

Now What: The animal health business is big and growing, so investors aren't wrong to wonder whether or not someone could step up and make a deal to buy Zoetis -- especially given Ackman's involvement.

But with a forward P/E ratio of 25.8 and a market cap north of $24 billion, Zoetis won't come cheap.

If Valeant isn't interested in acquiring Zoetis, there are still some potential suitors, including Eli Lilly, which bought Novartis' animal health business last year, and both Merck & Co. and Bayer, which have deep pockets and operate animal health segments too.

However, even if no one makes a bid to acquire Zoetis, investors might still want to consider owning its shares.

Sales of the company's medicine for livestock, such as cattle and pigs, is growing by double digits in the U.S. and the domestic companion market is attractive given that owners are increasingly willing to spend on healthcare for their pets. For those reasons, Zoetis' long-term potential may make it worth picking up shares if they continue to drop.