Growing up really is hard to do – especially for a small med-tech company in a big pond – but ICU Medical Inc. has "finally delivered" in a transformative way, according to analysts reacting to ICU's $1 billion deal to acquire Pfizer Corp.'s infusion therapy business, Hospira Infusion Systems.

"Small companies either have to get bigger or get consolidated, and it's incredibly hard for small companies to get bigger in maturing markets," ICU CEO Vivek Jain said during a conference call Thursday.

The acquisition will create a pure-play infusion therapy company with combined revenue in the neighborhood of $1.45 billion and is expected to remove a long-standing customer concentration overhang for the San Clemente, Calif.-based company. Despite the many facets of the ICU-Hospira story that make this deal rather unique, the acquisition also makes a lot of sense, according to Jain.

For starters – Hospira began integrating ICU's needle-free technology into its infusion offering globally more than 20 years ago, and both companies have faced a fair amount of challenging transitions. Hospira was spun out of Abbott Laboratories in 2004 and has only been owned by Pfizer for about a year. The drug company acquired the business in September 2015 through its $15 billion purchase of Hospira Inc., which is developing biosimilars, but in July Pfizer indicated that it was looking to sell the infusion products.

ICU faced its own tough situation, Jain said, with one customer controlling 35 percent of its earnings, which he said created a concentration risk that was hard to solve and has been a primary concern for ICU's investors. So much so that he said the company was prepared to accept 16.6 percent primary equity ownership dilution to secure 35 percent of its EBIT, independent of any other transaction that had surfaced.

ICU agreed to pay New York-based Pfizer 3.2 million shares of common stock for roughly $400 million ($125 a share) and $600 million in cash, which Jain said will be split $90 million in retained working capital and $510 million in cash funding. The deal is expected to close in the first quarter of 2017, and the drug maker will own about 16.6 percent of ICU Medical.

The company's total cash outlay, including fees, will be roughly $530 million at closing with $300 million in incremental committed financing in a "very straightforward" term loan, Jain said.

"We recognize the situation of a small supplier buying their customer is unusual, and [Pfizer's] willingness to believe in our team and the opportunity with this asset made this happen," he said.

"We know that all customers have a boss and a budget, and we want them to be successful. And being focused around them is the right first step."

The CEO was frank with its investors during the call and laid out both a best-case and a worst-case scenario for the future. Best case, he said, the deal will allow ICU to execute better to improve its top-line performance, drive operating improvements, and focus on cash conversions and returns. Worst case, the company will continue to fight headwinds on the top line, but will still drive operating improvements and generate solid cash returns over time, he said.

"Investing outside of one's core vertical is dangerous," Jain said, and the company saw the Hospira opportunity as a way to grow within the circle of what the management team understands.

Also, he said, the ability to offer the full product suite was a "unique opportunity to become a big player where ICU has been a small player in a category dominated by multinationals," he said.

ICU's stock (NASDAQ: ICUI) spiked 14.86 percent ($18.72) Thursday to close at $144.68, beating its 52-week high was $128.93.

"After years of building its cash war chest, ICUI finally delivered on the M&A front in a transformative way," said Chris Lewis, of Roth Capital Partners LLC. "While many of the deal's details will take time to fully digest, we are overall positive on the deal as it removes the long-standing customer concentration overhang and grows ICUI into a legitimate pure-play infusion therapy with a complete product portfolio" that adds infusion pumps and IV solutions to ICU's existing offering of IV sets and accessories.

The analyst said he is confident in the long-term value of the deal, but expects 2017 to be a transition year consumed with integration and "choppy one-time expenses."

Jain said the company expects revenues of about $1.1 billion and adjusted EBITDA of about $75 million, which he said is due to the "complicated carveout of a business Pfizer didn't own for very long" that will take significant stand-up and separation costs,

For 2018 and beyond, however, he said ICU aims to be $300 million-plus EBITDA business, assuming the initial costs of doing the deal are offset by the synergies. "We are not pinpointing that as a specific full-year guidance right now, or as the existing run rate for 2018, but bracketing it a little bit," he said.

Doug Giordano, senior vice president of business development at Pfizer, will join ICU's board and the drug company has agreed to an 18-month lockup correlated to successful carveout of the business, Jain said, adding that "ICU provided an incentive for an orderly disposition of the shares through an underwritten offering."