By Ransdell Pierson
(Reuters) – Pfizer Inc <PFE.N> said on Thursday it would sell its global infusion therapy business, part of its $15 billion (11.8 billion pounds) Hospira acquisition last year, to ICU Medical Inc <ICUI.O> for $1 billion in cash and stock.
ICU Medical’s shares jumped 11 percent to a 52-week high of $139.81 in late morning trading, while Pfizer shares slipped 1 percent, in line with declines for the drug sector.
Pfizer had acquired the hospital infusion systems, which have annual sales of about $1.2 billion, through its 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 spokeswoman Joan Campion said on Thursday the drugmaker had determined that more value could be extracted from the products “outside of Pfizer.”
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.
The deal is expected to close in the first quarter of 2017, the companies said.
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 the business.
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.
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 makes medical devices used in infusion therapy, oncology and critical care.
ICU 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.
(Reporting by Akankshita Mukhopadhyay and Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila and Bernadette Baum)