IMS Health Holdings Inc. (NYSE: IMS) will merge with Quintiles Transnational Holdings Inc. (NYSE: Q) in an all-stock transaction with an equity value of about $9 billion, bringing together two of the biggest providers of data about the pharmaceutical industry. For more on M&A in the sector, see Health Care Data Providers Are Becoming Attractive Targets, Thanks to the Affordable Care Act.
IMS Health shareholders will receive 0.384 Quintiles common stock for each share of IMS. The combined business will have an enterprise value of more than $23 billion, the companies said, and IMS Health shareholders will own about 51.4 percent of the shares of the combined business, according to a statement Tuesday. The equity value is based on IMS’s 336 million shares outstanding.
The combination, which the companies expect to complete in the second half, will create an expanded pool of information drugmakers can buy to improve their businesses. IMS Health tracks prescriptions, medical claims and electronic records and sells the data, while Quintiles offers a range of services focused on product development, including advice on clinical-trial design -- a business called a contract research organization, or CRO.
“We view today’s merger as an intriguing combination, combining a market leading CRO with a dominant data service/technology company,” Ross J. Muken, an Evercore ISI analyst, said in a note to investors, calling the transaction a “bold move” for Quintiles.
The transaction values IMS at $26.53 a share, below its closing price of $26.87 on Monday. The stock had gained 5.5 percent this year, while Quintiles was little changed.
The deal will add to 2017 earnings excluding some items.
The combined company, Quintiles IMS Holdings Inc., will maintain dual headquarters in Danbury, Connecticut, and Research Triangle Park, North Carolina. Ari Bousbib, chairman and chief executive officer of IMS Health, will become chairman and CEO of the merged business. Quintiles CEO Tom Pike will become vice chairman. The board will be comprised of six directors appointed by the Quintiles board and six directors appointed by the IMS Health board.
Goldman, Sachs & Co. provided financial advice to IMS Health, whose legal adviser was Weil, Gotshal & Manges LLP. Morris, Nichols, Arsht & Tunnell LLP served as legal adviser to the independent committee of the IMS Health board of directors. Quintiles’ legal advisers are Bryan Cave LLP and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, and its financial adviser is Barclays. Simpson Thacher & Bartlett LLP served as legal adviser to Quintiles’ independent directors.