Pfizer Merger Case Study

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Background of the deal
On February 5, 2015, Pfizer Inc, Hospira Inc., Hospira and Perkins Holding Company (a wholly owned subsidiary of Pfizer) entered into an agreement and Plan of Merger. As per the agreement, Perkings would merge with and into Hospira, with Hospira surviving as a wholly-owned subsidiary of Pfizer.

As per the agreement, each share of Hospira’s common stock (par value $0.01 per share) which was issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time” is nothing but the date and time on which the Merger becomes effective) will be converted into the right to receive $90.00 in cash.
Consummation of the Merger was subject to customary conditions, including:
(i) approval of the holders
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The global marketplace for biosimilars is estimated to be approximately $20 billion in 2020. Since both sterile injectables and biosimilars are large but growing categories, theoretically this deal should be a success. In this report, we also have done valuation to evaluate this deal better.
Pfizer financed the transaction through a combination of existing cash and new debt, with approximately two-thirds of the value financed from cash and one-third from debt. This way, Pfizer put to use the huge cash it was sitting upon. Pfizer anticipates the merger to deliver $800 million in annual cost savings by 2018.

The transaction was subject to customary closing conditions, including regulatory approvals in several jurisdictions including EU, Australia, Canada other than the US. Hospira’s shareholders approved the deal in the second half of 2015. The whole deals duration from announcement to completion was 210 days.

Pfizer’s financial advisors for the transaction were Guggenheim Securities, J.P. Morgan and Lazard, with Ropes & Gray LLP acting as its legal advisor and Clifford Chance LLP advising on international regulatory matters. Morgan Stanley served as Hospira’s financial advisor, while Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates served as its legal

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