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Pfizer's offer of $90 per share represents a
premium of 39 percent to Hospira stock's close on Wednesday.
Hospira was trading at $88 before the bell, while Pfizer was up
1.7 percent.
Drugmakers are racing to develop biosimilars, which typically
cost 20-30 percent less than the original, as big-ticket patents
on biotech drugs expire and cash-strapped healthcare systems
look to cut costs.
Biosimilars are expected to account for about a quarter of the
$100 billion in sales stemming from off-patent biological drugs
by the end of the decade, according to a study compiled by
Thomson Reuters BioWorld.
Hospira is seeking approval from the U.S. Food and Drug
Administration to market a copy of Johnson & Johnson's
blockbuster arthritis treatment Remicade.
The total enterprise value of the deal is about $17 billion, the
companies said.
Hospira had $1.75 billion of outstanding long-term debt as of
Sept. 30, according to a regulatory filing.
The deal is expected to add 10-12 cents per share to Pfizer's
earnings in the first full-year after the deal closes.
Pfizer's financial advisers are Guggenheim Securities, J.P.
Morgan and Lazard, with Ropes & Gray LLP serving as legal
adviser and Clifford Chance LLP advising on international
regulatory matters.
Morgan Stanley is Hospira's financial adviser, while Skadden,
Arps, Slate, Meagher & Flom LLP & Affiliates served as its legal
adviser.
(Reporting by Vidya L Nathan and Natalie Grover in Bengaluru;
Editing by Don Sebastian and Savio D'Souza)
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