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 Pfizer had acquired the hospital infusion system business, which has
annual sales of about $1.2 billion, through its $15 billion purchase
in September 2015 of Hospira, which sells generic hospital products
and is developing biosimilars meant to compete with big-selling
biotech drugs.
But Pfizer said in July it was exploring the possible sale of the
infusion products to focus on its core pharmaceuticals business.
"They're not a strategic fit for Pfizer, which has been looking for
a buyer," said John Boris, an analyst with SunTrust Robinson
Humphrey.
Pfizer will receive $600 million in cash and nearly $400 million in
newly issued shares of ICU Medical, giving it a stake of about 16.6
percent in the company.
ICU Medical's shares jumped 14 percent to a 52-week high of $143.59
in late afternoon trading, while Pfizer shares slipped 0.9 percent,
in line with declines for the drug sector.
Chris Lewis, an analyst at Roth Capital Partners, said the addition
of Hospira's infusion pumps and intravenous solutions to ICU
Medical's needle-free connectors and other intravenous accessories
would create a "pure play" infusion therapy company offering a
complete set of products.
"ICU has been building a war chest for acquisitions and finally
delivered on the M&A front," Lewis said.
Pfizer spokeswoman Joan Campion said on Thursday the drugmaker had
determined that more value could be extracted from the Hospira
products "outside of Pfizer," and that Pfizer's stake would allow it
to profit from the smaller company's future growth.
The deal is expected to close in the first quarter of 2017, the
companies said.
POTENTIAL DIVESTMENT
Pfizer's purchase of Hospira had been seen by Wall Street analysts
as a way of bolstering Pfizer's generic drugs ahead of potentially
divesting them.
But the largest U.S. drugmaker said last week, after several years
of analysis, it had decided not to split, instead holding on to its
low-growth generics business because splitting it from Pfizer's
patent-protected products would not boost cash flow or better
position the businesses competitively.
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The biggest part of Hospira's business is sterile injectables, such
as antibiotics and pain medicines preloaded into syringes. Combined
with such products already owned by Pfizer, they generate annual
sales of about $6 billion.
ICU also makes devices and supplies used in hospital critical care
settings, as well as safety systems for managing and delivering
hazardous chemotherapy drugs.
The San Clemente, California-based company said it expects 2016
adjusted profit of $4.60 per share on revenue of $370 million.
Analysts were expecting $4.54 per share and revenue of $367.3
million, according to Thomson Reuters I/B/E/S.
ICU Medical's financial advisers are Barclays and Wells Fargo
Securities, while Latham & Watkins is its legal adviser.
Pfizer's financial advisers are Goldman Sachs and Guggenheim
Securities. Skadden, Arps, Slate, Meagher & Flom LLP and Ropes &
Gray LLP are its legal advisers.
(Additional reporting by Akankshita Mukhopadhyay and Natalie Grover
in Bengaluru; Editing by Sriraj Kalluvila, Bernadette Baum and Bill
Rigby)
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