NEW YORK ( TheStreet) -- Pfizer  (PFE - Get Report) , following through on its pledge to boost growth through acquisitions, said on Thursday it has agreed to acquire Hospira  (HSP) in a deal valued at nearly $17 billion.

Terms of the deal call for New York-based Pfizer to pay $90 per share in cash for Hospira, a 39% premium to the target's Wednesday close. Pfizer said it will finance the deal with existing cash and new debt, pledging to extract $800 million in annual cost savings by 2018.

Hospira, of Lake Forest, Ill., makes injectable drugs and infusion technologies, as well as biosimilars, a term for subsequent versions of drugs. Pfizer, which has been seeking out deals since last year when AstraZeneca  (AZN) rebuffed its $120 billion approach, said the purchase would complement its global established pharmaceutical business and give it new products to distribute via its global pipeline.

"The proposed acquisition of Hospira demonstrates our commitment to prudently deploy capital to create shareholder value and deliver incremental revenue and EPS growth in the near-term," Pfizer Chairman and CEO Ian Read said in a statement. "Coupled with Pfizer's global reach, Hospira is expected to drive greater sustainability for our Global Established Pharmaceutical business over the long term."

Pfizer described both sterile injectables and biosimilars as "large and growing categories." The company estimates the global marketplace for injectables will grow to $70 billion by 2020 while the market for biosimilars is estimated to be $20 billion globally by that time. Pfizer has been under pressure to find new avenues for growth as widely prescribed drugs such as Lipitor lose their patent protections.

Hospira CEO F. Michael Ball in a statement called the merger "an excellent strategic fit, presenting a unique opportunity to leverage the complementary strengths of our robust portfolios and rich pipelines."

Pfizer received financial advice on the deal from Guggenheim Securities, J.P. Morgan and Lazard, with Ropes & Gray acting as legal adviser and Clifford Chance LLP advising on international regulatory matters.

Hospira was advised by Morgan Stanley and Skadden, Arps, Slate, Meagher & Flom LLP.


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