Hospira Inc. (HSP) to be Acquired by Pfizer for $15.2 Billion

Shares of Hospira Inc. (HSP) were trading up +22.88 or +35.31 percent to $87.68 per share in Thursday's premarket after news broke early this morning that the company would be taken over by Pfizer Inc. (PFE) in a $15.2 billion deal. Hospira stock closed at $64.80 per share, up +1.10 or +1.73 percent in Wednesday's regular trading session.

Lake Forest, Illinois based Hospira Inc. was founded in 2004 and was formerly the hospital products division of Abbott Laboratories (ABT). The company is the world's largest provider of generic injectable pharmaceutical products and infusion technologies and is a global leader in biosimilars.
Hospira employs over 19,000 people and sells its products to hospitals and alternate medical and healthcare providers such as clinics and long term treatment facilities.

New York City based Pfizer Inc. is the largest pharmaceutical company in the world by revenue. Pfizer's biggest products include Lipitor, used for lowering cholesterol, Diflucan, an oral antifungal medication, Viagra, for erectile dysfunction and Celebrex, an anti inflammatory drug. The company's pipeline is an industry leader and is currently working on developing treatments for cancer and Alzheimer's disease.

Pfizer announced early this morning that it would pay $15.2 billion or $90 per Hospira share in cash, and assume the company's debt making the total value of the transaction close to $17 billion. Pfizer tried to buy UK based AstraZeneca last year in a deal valued at more than $100 million that would have been the largest ever "inversion" transaction. Nevertheless, the company ran into major political opposition primarily because Pfizer would have reincorporated abroad to save a significant amount of taxes in the United States.

F. Michael Ball, Chief Executive Officer of Hospira Inc said in the company's press release that, "The Pfizer-Hospira combination is an excellent strategic fit, presenting a unique opportunity to leverage the complementary strengths of our robust portfolios and rich pipelines," he continued, "I want to recognize and thank our 19,000 employees around the world for their tireless efforts to deliver more affordable healthcare solutions, increase patient access to high-quality care and drive sustained growth for our shareholders."

Hospira's sterile injectable and biosimilars businesses are growing considerably, with the market for generic sterile injectables expected to reach $70 billion by 2020, while the market for biosimilars is forecast to grow to about $20 billion by 2020. Pfizer is expected to finance the deal with two-thirds of financing in cash and a third from issuing new debt and expects to deliver as much as $800 million in cost savings by 2018.

Ian Read, Chairman and Chief Executive Officer of Pfizer stated that, "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, 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."

Investors are showing optimism for the deal in the premarket, with Hospira stock trading just a couple of dollars under the bid price and Pfizer stock up more than three percent this morning.

Other News About HSP

Hospira's Plum 36O Infusion System Gets FDA Clearance
Company expects to make the Plum 360 Infusion system fully available in the U.S. in the coming weeks.

Feeling Good With This Med Company
Article focusing on Hospira's prospects and fundamentals written last month.

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Published on Feb 5, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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