Pfizer Buys Hospira

Pfizer announced that it was buying Hospira for $15.2 billion. The cost savings from the acquisition are expected to be $800 million, with a present value of $1 billion more than the acquisition premium of $4 billion. On the announcement, Pfizer's market capitalization shot up $6 billion, implying that investors believe the acquisition of Hospira is a positive NPV acquisition. After Pfizer's other recent acquisitions, this would be a welcome note. In 2000, Pfizer acquired Warner-Lambert for about $90 billion, Pharmacia in 2003 for about $60 billion, and Wyeth in 2009 for $68 billion. So, in total, Pfizer spend about $218 billion for these three acquisitions. Since Pfizer is currently worth about $200 billion, Pfizer grossly overpaid for all these acquisitions.