IMS Health Holdings, Inc., a pharmaceutical market information and technology provider, and Quintiles Transnational Holdings Inc., a contract research organization, have agreed to merge in an all-stock merger of equals transaction in a deal valued at approximately $8.75 billion. The merged company will be named Quintiles IMS Holdings, Inc. Based on the closing of IMS Health and Quintiles common stock prices on May 2, 2016, the equity market capitalization of the joined companies is more than $17.6 billion and the enterprise value is more than $23 billion.

Under the terms of the merger agreement, IMS Health shareholders will receive a fixed exchange ratio of 0.384 shares of Quintiles common stock for each share of IMS Health common stock. Upon completion of the merger, IMS Health shareholders will own approximately 51.4% of the shares of the combined company on a fully diluted basis, and Quintiles shareholders will own approximately 48.6% of the combined company on a fully diluted basis.

The companies offered that the strategic rationale for the combination as the following: (1) to enable improved clinical trial design, recruitment and execution in the $100 billion biopharma product development market by combining IMS Health’s information solutions with Quintiles’g product development skills; (2) create a distinctive global Real-World Evidence solutions platform by combining a portfolio of anonymous patient records, technology-enabled data collection, and observational research experts to address critical healthcare issues of cost, value, and patient outcomes; (3) further differentiate commercial analytics and outsourcing services to support the efficiency of life sciences’ commercial organizations.

The combined company expects to 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 chief executive officer of the merged organization. Tom Pike, chief executive officer of Quintiles, will become vice chairman. The company’s Board of Directors will be comprised of six directors appointed by the Quintiles Board of Directors and six directors appointed by the IMS Health Board of Directors. The lead director will be Dennis Gillings, CBE, Ph.D.

The 2015 pro forma reported revenue for Quintiles IMS was $7.2 billion. The transaction is subject to customary closing conditions, including regulatory approvals and approval by both IMS Health and Quintiles shareholders and is expected to close in the second half of 2016. Shareholders of IMS Health owning approximately 54% of the common stock of IMS Health and shareholders of Quintiles owning approximately 25% of the common stock of Quintiles have entered into agreements to vote the portion of their shares over which they have voting power to vote in favor of the transaction. The companies intend to refinance certain debt in connection with the merger. Committed financing has been obtained.

The companies xpect to achieve annual run-rate cost savings of $100 million by the end of year three after the close of the transaction.

Source: IMS Health and Quintiles