Pfizer to Acquire Hospira for $17 BillionBy
Pfizer Inc. has entered into a definitive merger agreement under which Pfizer will acquire Hospira, a provider of injectable drugs and infusion technologies and biosimilars, for $90 a share in cash for a total enterprise value of approximately $17 billion. The boards of directors of both companies have unanimously approved the merger. The transaction is subject to customary closing conditions, including regulatory approvals in several jurisdictions and approval of Hospira’s shareholders, and is expected to close in the second half of 2015.
“The proposed acquisition of Hospira demonstrates our commitment to prudently deploy capital to create shareholder value and deliver incremental revenue and EPS growth in the near-term,” said Ian Read, chairman and chief executive officer, Pfizer, in a statement. “In addition, Hospira's business aligns well with our new commercial structure and is an excellent strategic fit for our Global Established Pharmaceutical business, which will benefit from a significantly enhanced product portfolio in growing markets. Coupled with Pfizer's global reach, Hospira is expected to drive greater sustainability for our Global Established Pharmaceutical business over the long term.”
Pfizer said that the combination of the two companies will add a growing revenue stream and a platform for growth for Pfizer's Global Established Pharmaceutical (GEP) business. The expanded portfolio of sterile injectable pharmaceuticals, composed of Hospira's broad generic sterile injectables product line, including acute care and oncology injectables, with a number of differentiated presentations, as well as its biosimilars portfolio, combined with GEP's branded sterile injectables, including anti-infectives, anti-inflammatories and cytotoxics, will result in an enhanced global sterile injectables business. “The combination also reinforces GEP's growth strategy to build a broad portfolio of biosimilars in Pfizer's therapeutic areas of strength through the addition of Hospira's portfolio that includes several marketed biosimilars,” said Pfizer in a statement. “Pfizer will also use its existing commercial capabilities, global scale, scientific expertise and world class development capabilities to significantly expand the reach of Hospira's products, which are currently distributed primarily in the United States, to Europe and key emerging markets, where GEP has a significant presence.”
In its statement, Pfizer offered market data to support growth prospects for generic sterile injectables and biosimilars. The global marketplace value for generic sterile injectables is estimated to be $70 billion in 2020. The global marketplace for biosimilars is estimated to be approximately $20 billion in 2020.
Pfizer expects to finance the transaction through a combination of existing cash and new debt, with approximately two-thirds of the value financed from cash and one-third from debt. In addition, Pfizer anticipates the transaction to deliver $800 million in annual cost savings by 2018.