IMS Health Holdings plans to merge with Quintiles Transnational Holdings, the companies said today, in an approximately $9 billion deal designed to create one of the world’s largest providers of healthcare data, technology, and services solutions.
The merger will create a combined entity—to be called Quintiles IMS Holdings—with combined 2015 revenue of $7.2 billion and combined market capitalization of more than $17.6 billion.
IMS Health shareholders will receive 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, with the remaining 48.6% to be owned by Quintiles shareholders.
“This combination addresses life science companies’ most pressing needs: to transform the clinical development of innovative medicines, demonstrate the value of these medicines in the real world, and drive commercial success,” Quintiles CEO Tom Pike said in a statement.
Quintiles and IMS Health continue the trend of consolidation in the contract research organization (CRO) industry. The industry is expected to consolidate further given speculation about merger talks between LabCorp—which completed its $6 billion-plus acquisition of Covance last year—and INC Research, as well as investor expectations that inVentive, Medpace, and PPD will pursue initial public offerings in the near future.
“The landscape of the CRO industry is rapidly changing,” Industry Standard Research (ISR) stated in a note to investors this morning. “This land-grab will likely continue. We are seeing the largest CROs saying ‘I am big enough, I need to add complementary services’ and the smaller VC/PE [venture capital/private equity]-backed CROs trying to monetize their value.”
“We would not be surprised to see several mergers of mid-size CROs in an attempt to quickly gain scale,” ISR added.
The companies said that combining IMS Health’s global information solutions with Quintiles’ product development expertise will enable the combined company to:
- Improve clinical trial design, recruitment, and execution.
- Improve commercial analytics and outsourcing services to support greater efficiency for life sciences commercial clients.
- Aggregate their portfolios of anonymous patient records, data collection, and research experts into a global “real-world evidence” solutions platform to address healthcare cost, value, and patient outcomes.
“Together our solutions will enable differentiation in the CRO market, advance real-world evidence capabilities, and deliver comprehensive commercial solutions for our clients,” added Ari Bousbib, IMS Health Chairman and CEO.
Bousbib will become chairman and CEO of the merged organization, with Pike serving as vice chairman.
Quintiles IMS will be governed by a Board of Directors consisting of six directors appointed by Quintiles’ current board, and six to be named by IMS Health’s board. Quintiles Chairman and founder Dennis Gillings, CBE, Ph.D., will serve as lead director of the combined company.
Quintiles IMS Health expects to generate annual cost savings of $100 million by the end of year 3; the companies’ announcement gave no details. The merger is expected to add to the combined company’s adjusted diluted earnings per share next year.
The combined company is expected to maintain dual headquarters in IMS health’s home base of Danbury, CT, as well as at Research Triangle Park, NC, where Quintiles is based.
The merger is expected to close in the second half of 2016, subject to customary closing conditions, including regulatory approvals and approval by both IMS Health and Quintiles shareholders. IMS Health shareholders who own approximately 54% of their company’s common stock and Quintiles shareholders owning approximately 25% of their company’s common stock have agreed to vote in favor of the transaction.
The companies added that they intend to pay for the merger through refinancing of debt and have obtained financing for the purpose.