02/05/2015 07:19 EST | Updated 04/07/2015 05:59 EDT

Pfizer buying Hospira for about $15.23B, will pay $90 per share in cash

NEW YORK, N.Y. - Pfizer is buying Hospira for approximately $15.23 billion, saying it is a good fit with its global established pharmaceutical business.

Hospira Inc., based in Lake Forest, Illinois, is a provider of injectable drugs and infusion technologies.

Pfizer Inc. will pay $90 per share in cash, which is a 39 per cent premium to Hospira's Wednesday closing price of $64.80. The companies put the deal's enterprise value at about $17 billion.

Pfizer — which is the world's second-largest drugmaker by revenue — said Thursday that it will use its global network to help expand Hospira's reach to Europe and key emerging markets. Hospira's products are currently distributed mostly in the U.S.

Pfizer, a Dow component whose products include Viagra and painkiller Celebrex, has been under pressure from investors to boost its share price. The company has sold and spun off big parts of its business over the last few years, including animal health, nutrition and a capsule-making unit. This has helped, but hasn't satisfied detractors.

That's pushed CEO Ian Read to attempt Pfizer's oft-used strategy of doing big deals to quickly boost revenue and cut costs. Analysts have said that since Pfizer's $119 billion offer for Britain's AstraZeneca PLC was rejected last May it needed to find another big takeover target.

Read has previously said that he's open to any deals that boost value.

Pfizer expects to finance the Hospira transaction with a combination of existing cash and borrowing. The New York company anticipates the acquisition delivering $800 million in annual cost savings by 2018.

The deal is expected to add 10 cents to 12 cents per share to earnings in the first full year after the acquisition closes, with additional accretion expected after that.

Both companies' boards unanimously approved the transaction, which still needs approval from Hospira shareholders. The acquisition is targeted to close in the second half of the year.

Shares of Hospira soared $23.40, or 36.1 per cent, to $88.20 in premarket trading, while Pfizer's stock added 73 cents to $32.80.