After posting upbeat first quarter earnings, contract medical research provider Quintiles Transnational Holdings Inc. and healthcare information company IMS Health Holdings Inc. have agreed to an all-stock merger. The deal stands at about $9 billion.
The new merged entity of will be known as Quintiles IMS Holdings. It will be offering drug and medical device maker services ranging from helping launch clinical trials to tracking sales as soon as a product hits the market.
The joint company will maintain dual headquarters in Danbury, Connecticut and Research Triangle Park, North Carolina.
Market capitalization of both IMS and Quintiles is over $17.6 billion with an enterprise value of more than $23 billion, based on the stocks closing price on Tuesday.
According to IMS Health in a statement on Tuesday, its shareholders will obtain 0.384 Quintiles common stock for each share of IMS. After the merger, the IMS Health shareholders will own around an estimated 51.4 percent of the combined company shares, while Quintiles shareholders will own the rest.
IMS Health’s shares were untraded before the opening bell on Tuesday, while Quintiles’ shares dipped 3 percent at $67.
Quintiles released its first quarter reports of earnings per share of $0.89, topping analysts’ estimates of $0.86. However, net revenue of $1.11 billion did not beat the Street’s forecast of $1.12 billion.
For the current fiscal year, the medical research provider estimates its EPS to be in the $3.70 - 3.85 range, against analysts’ prediction of $3.78. Sales are anticipated to grow from 7 to 8.5 percent with annual effective tax rate of 29 percent.
Meanwhile, IMS Health Holdings Inc. released EPS of $0.42, beating the estimates of $0.38. Net revenue of $774 million surpassed the Street’s forecast of $749.54 million as well.
The healthcare information company anticipates EPS to grow 5.5 to 6.5 percent for the present quarter, and forecasts revenue growth ranging from 7.5 to 8.5 percent.
For the 2016 fiscal year, EPS growth is predicted to be between 8.5 - 10 percent and revenue to grow between 10 - 12 percent.
Quintiles stock has 0.7 percent, while IMS Health stock has surged 5.25 percent year-to-date. However, during the pre-market trade earlier, both stocks were inactive.
IMS Health CEO Ari Bousbib will be named CEO and chairman of the merged company, while Quintiles CEO Tom Pike will be seated as vice chairman. Quintiles IMS Holdings company’s board will also be comprised of twelve directors all in all—six chosen by the Quintiles board, and another set of six directors appointed by the IMS Health board.
Goldman, Sachs & Co. offered financial advice to IMS Health, whose legal adviser was Weil, Gotshal & Manges LLP. Morris, Nichols, Arsht & Tunnell LLP on the other hand, were the legal advisers to the independent committee of the IMS Health Board of Directors.
Bryan Cave LLP and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP were Quintiles’ legal advisers, and its financial adviser is Barclays. Simpson Thacher & Bartlett LLP assisted as legal adviser to Quintiles’ independent set of directors.
Both companies presume to close this deal in the second half of 2016 and are expected to add to 2017 earnings. They also claimed to have planned to refinance some debt regarding the merger and that committed financing had been acquired.