ICU Medical (NSDQ:ICUI) agreed to pay $1 billion in cash and stock for the Hospira infusion pump business owned by Pfizer (NYSE:PFE), confirming rumors that swirled earlier this year that the drug giant was looking to sell the business.
The deal calls for ICU Medical to put up $400 million worth of new shares and $600 million in cash, leaving Pfizer with a 16.6% stake in ICU. The acquisition, expected to close during the 1st quarter of 2017, includes IV pumps, solutions and devices made by the Hospira Infusion Systems business. ICU pegged its pro-forma annual revenues after the deal at roughly $1.45 billion, based on trailing 12-month results as of June.
“The combination of these 2 businesses is the natural evolution of a productive relationship that began more than 20 years ago when Hospira began integrating ICU Medical’s needle-free technology into their infusion offering globally,” ICU Medical CEO Vivek Jain said in prepared remarks. “By acquiring the Hospira Infusion Systems business, currently our largest single customer, we create a pure-play infusion business with the focus and scale to compete globally, eliminate our single customer concentration issue, and have a significant value creation opportunity as a much larger company. We look forward to serving more customers as we continue to bring clinical and economic value to the marketplace.”
“We are pleased that Hospira Infusion Systems is combining with ICU Medical, and we believe the combined company will be well positioned in the marketplace to deliver value to customers through its strong product portfolio and the expertise of colleagues from both companies. I’m proud of the Hospira Infusion Systems team and their positive impact on patients around the world,” added Pfizer Essential Health president John Young.
Pfizer can nominate a board member for ICU Medical as long as it still holds at least a 10% stake in the company. The deal also includes provisions limiting Pfizer’s ability to trade ICUI shares for 18 months after the transaction closes, the companies said.
ICU Medical updated its 2016 guidance, saying it now expects to post numbers “slightly above” the top end of its prior outlook for adjusted earnings per share of $4.60 on sales of $370 million. Third-quarter adjusted EPS are forecast at $1.20 on sales of $96 million, the company said.
ICUI shares rose about 7% to $135 apiece in light pre-market trading today.
Barclays and Wells Fargo Securities advised ICU Medical on the deal, with Latham & Watkins as legal advisor. Pfizer tapped Goldman, Sachs & Co. and Guggenheim Securities as advisors, with Skadden, Arps, Slate, Meagher & Flom and Ropes & Gray as legal advisors.
Pfizer paid $15 billion for Hospira in September 2015, its largest-ever buyout. In addition to the infusion pump business, Hospira makes generic versions of injectable drugs and biosimilars including a knockoff of Johnson & Johnson‘s (NYSE:JNJ) blockbuster anti-inflammatory Remicade. Pfizer paid $90 per share in cash, a 39% premium to Hospira’s closing stock price the day before the February bid.