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 percent premium to Hospira's Wednesday closing price of $64.80. The companies put the deal's enterprise value at about $17 billion.
Pfizer 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 expects to finance the 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 $23.70, or 36.6 percent, to $88.50 in premarket trading, while Pfizer's stock added 33 cents to $32.40.