Quintiles, IMS Health to merge in $9bn deal

May 03, 2016, 2:26 PM EDT
(Source: Tom Woodward/flickr)
(Source: Tom Woodward/flickr)

Quintiles and IMS Health will merge in $9 billion pharmaceutical data deal.

Bloomberg reports:

IMS Health Holdings Inc. will buy Quintiles Transnational Holdings Inc. in an all-stock transaction for about $9 billion, bringing together two of the biggest providers of data and services for the pharmaceutical industry. IMS Health shareholders will receive 0.384 share of Quintiles common stock for each of their shares, and they will own about 51.4 percent of the combined business, according to a statement Tuesday. The transaction offers no premium compared with Monday’s close. Both stocks declined in New York trading. The combination will create an expanded pool of information for drugmakers, which are under pressure to limit costs and improve the efficiency of their research. 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. Investors may be wary of the deal because “neither side is receiving a merger-related premium from the combination” and “integration risks are higher in a merger-of-equals,” John Kreger, an analyst at William Blair, said in a research note.

Reuters notes:

The deal underscores the growing importance of information technology and data analytics in medical research and comes at a time when pharmaceutical companies are cutting costs by increasingly outsourcing drug development. While Quintiles is one of the world's largest contract research provider, IMS Health provides market and sales research services to the healthcare industry.

The New York Times writes:

The transaction would be subject to approval by regulators and the shareholders of both companies. It is expected to close in the second half of the year. Investors owning about 54 percent of IMS Health and 25 percent of Quintiles have entered into agreements to vote in favor of the deal. The companies expect to achieve about $100 million in annual cost savings by the end of the third year following the transaction. The combined company would be called Quintiles IMS Holdings and maintain dual headquarters in Connecticut and North Carolina. Ari Bousbib, the chairman and chief executive of IMS Health, would serve in the same role at the combine company.