At a time when there is pressure on how large US companies are making domestic or overseas acquisitions are coming under more scrutiny, Pfizer Inc. (NYSE:PFE) announced on Monday that the Federal Trade Commission has terminated the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 over Pfizer’s pending acquisition of Hospira (NYSE: HSP).
While this sounds like an auto-approval, the conditions to the approval are that Pfizer must divest four U.S. sterile injectable assets. These include Acetylcysteine, Clindamycin, Voriconazole and Melphalan. Pfizer also announced on Monday that Brazil’s Superintendency-General of CADE has published its unconditional clearance decision.
Pfizer’s management said that this already planned transaction should now close in early September.
Hospira had annual revenue of $4.46 billion in 2014 and was expected to have 2015 and 2016 sales of $4.7 billion and $5 billion respectively. Hospira generated operating income of $466 million and net income of $333 million in 2014. Hospira’s market cap is $15.5 billion.
Pfizer has a $201 billion market cap, with operating income of $13.25 billion and net income of $9.13 billion in 2014 It is expected to generate $46.1 billion in 2015 revenue versus $49.4 billion in 2014.
Pfizer shares were down 2.9% at $32.55 in mid-day trading on Monday, but that sell-off was tied to market volatility on a panic selling day rather than due to the Hospira deal receiving another approval.
The buyout will generate $90.00 per share in cash for each Hospira share, but that will generate an enterprise value of about $17 billion after including debt.
Hospira shares were up 0.3% at $89.80 late on Monday.