Pfizer, Inc PFE) has entered into a definitive agreement to sell its Hospira infusion systems business to medical device maker ICU Medical Inc. (ICUI - Snapshot Report) for $1 billion in cash and stock. Shares of ICU Medical were up almost 15% on Thursday.
With the addition of Hospira infusion systems business which includes IV pumps, solutions, and devices, ICU Medical will become a leading pure-play infusion therapy company. The deal extends the company’s global presence with direct operations in more than 20 countries. Hospira Infusion Systems business is presently ICU Medical’s largest single customer.
Per terms of the deal, Pfizer will receive approximately $400 million in freshly issued ICU Medical shares and have a 16.6% stake in the company. The purchase consideration also includes 600 million in cash.
Additionally, as long as Pfizer keeps a 10% stake in ICU Medical’s common equity, it will have the right to nominate one director to ICU Medical’s board of directors.
The transaction is expected to close in the first quarter of 2017, subject to regulatory approvals. Pfizer bought Hospira infusion systems business as part of its Sep 2015 acquisition of Hospira, a leading sterile injectable drugs and biosimilars manufacturer, for about $17 billion.
The Hospira acquisition has significantly expanded Pfizer's sterile injectable and biosimilar capabilities. This takeover provided Pfizer with Hospira’s lucrative biosimilar portfolio of both marketed and pipeline assets. Biosimilars of Herceptin, Rituxan/MabThera, Avastin and AbbVie Inc.’s (ABBV - Analyst Report) Humira are in phase III development, while biosimilars of Amgen Inc.’s (AMGN - Analyst Report) Neupogen and Neulasta are in phase I. Pfizer believes that the market for biosimilars is huge and can grow to $17–$20 billion by 2020.
Hospira added $1.13 billion to Pfizer’s top line in the last reported quarter – second quarter of 2016.
While Pfizer carries a Zacks Rank #3 (Hold), ICU Medical has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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