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Pfizer (PFE) Quietly Takes 16.4% Stake in This SoCal Medtech Firm

2/14/2017 6:23:26 AM

Pfizer Quietly Takes 16.4% Stake in This SoCal Medtech Firm February 14, 2017
By Mark Terry, Breaking News Staff

With little or no fanfare, Pfizer (PFE) acquired a 16.4 percent stake in San Clemente, Calif.-based ICU Medical (ICUI) on February 13. This is part of a deal announced in October 2016, where Pfizer sold its Hospira Infusion Systems (HIS) business to ICU Medical. The deal closed this week after some modifications to the original agreement.

A filing with the U.S. Securities and Exchange Commission (SEC) indicated that Pfizer acquired 3,200,000 shares of ICU stock.

The purpose of the deal was described: “Pursuant to the Purchase Agreement, ICU Medical purchased all of Pfizer’s global infusion therapy net assets, Hospira Infusion Systems, for a purchase price of 3,200,000 newly issued unregistered shares of Common Stock, a promissory note from ICU Medical in the amount of $75 million and net cash of approximately $200 million before customary post-closing adjustments for net working capital. In addition, Pfizer is entitled to receive a contingent amount of up to an additional $225 million in cash based on ICU Medical’s achievement of certain cumulative performance targets for the combined company through December 31, 2019.”

The two companies entered into the Shareholder Agreement on February 3. ICU Medical announced the deal on February 6. The Hospira Infusion Systems business includes I.V. pumps, solutions and device that will make ICU Medical one of the world’s leading pure-play infusion therapy companies.

“We are pleased that Hospira Infusion Systems is now part of ICU Medical and welcome our new Hospira colleagues to the ICU team,” said Vivek Jain, chairman and chief executive officer of ICU Medical, in a statement. “We look forward to working together to continue providing quality, innovation and value to our clinical customers worldwide.”
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The deal was originally announced on October 6, 2016. Under that deal, Pfizer received approximately $400 million in newly issued shares of ICU Medical common stock and $600 million in cash. Pfizer will own about 16.4 percent of ICU Medical. As long as Pfizer continues to hold 10 percent or more of ICU’s common equity, it has the right to nominate one director to the company’s board of directors.

ICU Medical, as part of the acquisition, has estimated pro forma combined revenues of about $1.45 billion based on trailing twelve month results as of June 2016.

On January 5, ICU announced that the original agreement had been modified as the result of changes in HIS’s performance. Under the modified deal, the aggregate purchased price was adjusted to no more than $900 million, as opposed to the original $1 billion. Pfizer received $400 million in equity in the form of 3.2 million newly issued ICU Medical Shares, which was part of the original agreement, but only $275 million in cash as opposed to $600 million, which will be financed with existing cash balances and a $75 million seller note.

Pfizer may receive up to $225 million more based on performance targets from the combined company through December 31, 2019.

In an investor presentation, ICU Medical indicated that the acquisition had complementary product portfolios that gave its customers a full suite of IV therapy devices and a unified distribution channel.

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