Pfizer to buy Hospira for $15 billion to bolster hospital products

Thu Feb 5, 2015 12:02pm EST
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By Caroline Humer and Ransdell Pierson

(Reuters) - Pfizer Inc (PFE.N: Quote) said it would buy Hospira Inc HSP.N for about $15 billion to boost its portfolio of generic injectable drugs and copies of biotech medicines.

Pfizer is known for prescription medicines like impotence treatment Viagra and Lyrica for nerve pain, but many of its biggest brands, including cholesterol treatment Lipitor and painkiller Celebrex, have lost patent protection and are facing cheaper generics. The company needs new products to keep its earnings growing.

Hospira makes generic versions of injectable drugs that are widely used in hospitals, through vials, syringes and bags, as well as pumps used to deliver them and other fluids. It also sells several biosimilars, or copies of biotech drugs, overseas and has others in development.

Pfizer offered $90 per share in cash, a 39 percent premium to Hospira's closing stock price on Wednesday. Hospira shares soared 35 percent to nearly $88 on Thursday, while Pfizer was up 2.7 percent at $32.93.

The proposed acquisition is Pfizer's largest since the New York company failed in its attempt to buy AstraZeneca Plc (AZN.L: Quote)(AZN.N: Quote), which rebuffed its $118 billion approach last year but has remained a subject of takeover speculation.

Pfizer said the latest move showed its commitment to deploy capital and deliver revenue and earnings-per-share growth in the near term. The company said it expected the deal to add 10 cents to 12 cents per share to earnings in the first full year after it closes.

"I don't think this deal is a game changer for Pfizer but helps them build out their sterile injectables business without wildly overpaying for assets, as the company has done in the past," said portfolio manager Les Funtleyder of E Squared Asset Management.

Pfizer expects the deal, which requires regulatory and shareholder approvals, to close later this year, immediately boosting earnings and enabling the company to cut annual costs by $800 million over the next three years.   Continued...

The Pfizer logo is seen at their world headquarters in New York April 28, 2014. REUTERS/Andrew Kelly