Pfizer Inc said it would sell its global infusion therapy business, a part of its $15 billion Hospira acquisition last year, to ICU Medical Inc for $1 billion in cash and stock.
ICU Medical’s shares rose as much as 16.51 percent to hit a record high of $146.76 in early trading on Thursday.
Pfizer will receive $600 million in cash and nearly $400 million in newly issued shares of ICU Medical, giving the drugmaker a stake of about 16.6 percent in the company.
New York-based Pfizer will also get the right to nominate one director to ICU’s board as long as the company maintains a 10 percent stake.
ICU makes medical devices used in infusion therapy, oncology and critical care.
Pfizer’s Hospira Infusion Systems (HIS) unit makes infusion pumps that provide exact dosages of intravenous drugs, which are used in intensive care, emergency care and neonatal care.
The acquisition of HIS – currently ICU’s single largest customer – will help the device maker become a “pure-play” infusion business with scale to compete globally, ICU Chief Executive Vivek Jain said.
The deal is expected to close in the first quarter of 2017, the companies said.
ICU said it expects third-quarter adjusted earnings of $1.20 per share on revenue of about $96 million. Analysts on average were expecting $1.09 per share and revenue of $89.3 million, according to Thomson Reuters I/B/E/S.
The company expects 2016 adjusted profit of $4.60 per share and revenue of $370 million. Analysts were expecting $4.54 per share and revenue of $367.3 million.
The combined business will generate pro forma revenue of about $1.45 billion.
ICU Medical’s shares pared some of their gains to trade at $136.47.
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.