Way back in February 2015, Pfizer Inc. (NYSE: PFE) agreed to pay $17 billion to acquire Hospira, Inc., a global provider of injectable drugs and infusion technologies. In early October 2016, Pfizer agreed to sell Hospira’s infusion therapy business to ICU Medical Inc. (NASDAQ: ICUI) for $1 billion in cash and stock. The company develops, manufactures and sells medical devices used in infusion therapy, oncology and critical care applications.
Pfizer will receive approximately $400 million in newly issued shares of ICU Medical common stock and $600 million in cash from ICU, for a total purchase price of approximately $1 billion. Upon completion, Pfizer will own approximately 16.6% of ICU Medical. So long as Pfizer continues to hold 10% or more of ICU Medical’s common equity, it will have the right to nominate one director to the company’s board of directors, and Pfizer has agreed to certain restrictions on transfer of its shares for at least 18 months.
Hospira’s product line includes IV pumps, solutions and devices, and constituted ICU Medical’s largest single customer. More than 20 years ago, Hospira began integrating ICU Medical’s needlefree technology into its global infusion offering. This acquisition creates a pure-play infusion business with the focus and scale to compete globally, and eliminates ICU Medical’s single-customer issue.
The acquisition also complements ICU Medical’s existing business by creating a company that has a complete IV therapy product portfolio from solutions to pumps to non-dedicated infusion sets, and the combination creates a leading pure-play infusion therapy company with estimated pro forma combined revenues of approximately $1.45 billion based on trailing 12-month results as of June 2016.
