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 |  Reuters -
Nov-06-2009UPDATE 3-IMS agrees to $4 bln deal, biggest LBO this year(topic overview)
CONTENTS:
- IMS Health, which provides market research to the pharmaceutical and health-care industries, has agreed to be acquired for $5.2 billion by private equity firm TPG Capital and the CPP Investment Board. (More...)
- The deal, which drew interest from a number of rival private-equity firms, is the latest sign that improving financial markets have started to ease access to capital, rebuild corporate share prices and repair confidence shattered by last year's credit crisis. (More...)
- IMS has said it will streamline organizations that do business in Europe, the Middle East and Africa, and reduce capacity and size of sales and management consulting teams in areas where demand is low. (More...)
- IMS Health provides sales analysis and medical audits to the pharmaceutical industry, has been the target of a second-round bidding process from several private-equity funds, which could alter TPG bid or force that fund to pay more, said the Journal. (More...)
- The company compiles and stores data on prescription drug sales in more than 100 countries, reporting $2.3 billion in 2008 sales. (More...)
- Additional information on factors that may affect the business and financial results of the company can be found in the filings of the company made from time to time with the Securities and Exchange Commission. (More...)
- Stocks to Watch Today is a daily blog about key stock and market movements, written by Barrons.com stocks columnist Bob O'Brien. (More...)
- CPPIB also moved, in conjunction with the Ontario Teachers Pension Plan Board, to table a US$6.2-billion offer for Australia's Transurban Group. (More...)
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IMS Health, which provides market research to the pharmaceutical and health-care industries, has agreed to be acquired for $5.2 billion by private equity firm TPG Capital and the CPP Investment Board. IMS is headquartered in Norwalk, Conn., but its major employment center - with around 1,000 people - is in Blue Bell, Montgomery County. The agreement calls for IMS shareholders to receive $22.00 cash for each share of IMS common stock they own, representing a premium over the $16.39 closing price on Friday. [1] Since the news of the potential sale broke two weeks ago, IMS Health shares have risen from $14.85 to $20.90 after trading opened today. As part of the agreement, IMS shareholders will receive $22.00 cash for each share of IMS common stock they own, which represents a 50% increase on the closing share price on Friday October 16 2009 ' the last trading day prior to speculation that IMS was considering the sale. 'This transaction enables our shareholders to realize substantial value from their investment in IMS with an immediate cash premium, while at the same time strengthening our position to capture long-term growth opportunities,' stated IMS Chairman and CEO David Carlucci. 'With the backing of world-class private equity partners, we will continue our focus on expanding into new markets, further improving the quality and depth of offerings we deliver to our clients, and playing a bigger role in the healthcare market,' he added.[2] The agreement was unanimously approved by the IMS Board of Directors based upon the recommendation of the Transaction Committee that was established to undertake a review of IMS'''s strategic alternatives. Under the agreement, IMS shareholders will receive $22.00 cash for each share of IMS common stock they own, representing a premium of approximately 50 percent over the closing share price on Friday, October 16, 2009, the last trading day prior to public speculation that IMS was considering its strategic alternatives. The transaction has fully committed financing, consisting of a combination of equity to be invested by TPG and CPPIB and debt financing to be provided by certain affiliates of Goldman, Sachs & Co., including its principal loan and mezzanine funds. '''This transaction enables our shareholders to realize substantial value from their investment in IMS with an immediate cash premium, while at the same time strengthening our position to capture long-term growth opportunities,''' said IMS Chairman and CEO David R. Carlucci.[3]
The CPP Investment Board and TPG Capital will pay IMS shareholders $22 per share under the deal, marking a 31 per cent premium to the stock's closing price of US$16.81 on the New York Stock Exchange on Wednesday.[4] Under the terms of the deal, TPG Capital and the pension plan's CPP Investment Board will pay $22 for each IMS share, representing a 31 percent premium to the stock's closing price of $16.81 on Wednesday.[5]
The deals -- a $5.2-billion bid for IMS Health Inc. with TPG Capital, and a US$6.2-billion offer for Australia's Transurban Group Ltd. in conjuction with the Ontario Teachers Pension Plan Board -- follow aggressive moves in the communications sector in which it acquired Australia's Macquarie Communications Infrastructure Group and a 15% stake in Internet telephony-provider Skype. Mark Wiseman, head of Canada Pension Plan Investment Board's private-equity team, said the fund is "active" in the marketplace as it is capitalizing on certain advantages, among them "ample" liquidity and a first-class research team.[6] Pharmaceutical research giant IMS Health has agreed to be sold to private equity firm TPG Capital and the Canada Pension Plan Investment Board (CPPIB) for $5.2bn.[2] Shares soar 23 percent by close of trading (Adds comments from Canada Pension Plan interview, adds Toronto to dateline) By Megan Davies and Pav Jordan NEW YORK/TORONTO, Nov 5 (Reuters) - Private equity firm TPG and the Canada Pension Plan struck on Thursday the biggest leveraged buyout deal of this year, worth $4 billion, to buy prescription drug sales data provider IMS Health Inc ( RX.N ).[7] IMS Health Inc. (RX) agreed to be acquired by private equity firm TPG Inc. and the Canada Pension Plan for $4 billion in a deal that comes two weeks after the medical-data provider confirmed a possible buyout could happen.[8]
IMS Health, a health care data company, said Thursday that it had agreed to be acquired by the private equity firm TPG and Canada Pension Plan for $4 billion in cash.[5]
P rivate-equity firm TPG and Canada Pension Plan are close to a deal for IMS Health, the U.S. health care data company, which would run at almost $4-billion (U.S.), the Wall Street Journal reports.[9] Health-care data company IMS Health is nearing a deal to sell itself to private-equity firm TPG and the Canada Pension Plan in a deal that could be worth almost $4bn ('''2.7bn), said several people familiar with the matter.[10] IMS Health Inc. (NYSE: RX ) is surging in the pre-market approximately 16% as it is nearing a deal to sell itself to private-equity firm TPG and the Canada Pension Plan in a deal that could have a value of almost $4 billion, according to the Wall Street Journal. If the deal goes through, this would be the largest leverage buyout of the year.[11] NEW YORK, Nov 5 (Reuters) - TPG and the Canada Pension Plan on Thursday announced a deal to buy IMS Health Inc, which provides prescription drug sales data, for around $4 billion.[12]
IMS Health, a provider of prescription-drug data, agreed to sell itself to TPG Capital and Canada Pension Plan's investment board for $5.2bn in what is the biggest leveraged buy-out this year.[13] The deal with TPG Capital and the CPP Investment Board, which invests funds not immediately needed by the Canada Pension Plan, is expected to close by the end of the first quarter of 2010. The cash portion of the deal represents the biggest leverage buyout this year, Reuters reported, based on data from Thomson Reuters.[14] Peter Redman/National Post Mark Wiseman, a senior vice president with CPP Investment Board: '''We are pleased to make a significant investment in IMS Health which is the market leader in its industry with a strong customer base." OTTAWA -- The Canada Pension Plan's investment arm threw its weight behind two deals worth US$11-billion Thursday, joining forces with a U.S. buyout titan in the largest North American private-equity deal of the year, and helping to launch an unsolicited takeover bid for Australia's biggest toll-road operator. Even though it has been initially rebuffed in its Australian foray, the moves by the Toronto-based pension fund are cementing its reputation as one of the largest and shrewdest private-equity players in the world, say people who follow the leveraged buyout field.[6]
The deal with TPG Capital and the CPP Investment Board, which invests the funds not needed by the Canada Pension Plan, is expected to close by the end of the first quarter of 2010.[1] TPG Capital has $45 billion in capital under management in funds. CPP Investment Board invests the assets of the Canada Pension Plan, which has $116.6 billion in its fund.[15]
IMS Health (NYSE: RX), the world'''s leading provider of market intelligence to the pharmaceutical and healthcare industries, today announced that it has entered into a definitive agreement to be acquired by investment funds managed by TPG Capital ('''TPG''') and the CPP Investment Board ('''CPPIB''') in a transaction with a total value of $5.2 billion, including the assumption of debt.[3] Healthcare consultant and data provider IMS Health Inc. announced Thursday that it would be acquired by TPG Capital and CPP Investment Board in a transaction valued at $5.2 billion.[16]
NORWALK, Conn. — Health care data company IMS Health Inc. said Thursday it is being bought by investment funds TPG Capital and CPP Investment Board for $4 billion, in a move to help the company restructure its business amid the shifting health care arena and sluggish economy.[17] U.S. health care data company IMS Health RX-N says it has agreed to be acquired by investment funds TPG Capital and Canada's CPP Investment Board for $4-billion (U.S.).[18]
TORONTO - Canada's CPP Investment Board will become a "significant minority investor" in IMS Health after the big U.S. health care software and data management company agreed Thursday to be acquired by the big Canadian pension fund and its American partner for US$4 billion.[4]
'''With the backing of world-class private equity partners, we will continue our focus on expanding into new markets, further improving the quality and depth of offerings we deliver to our clients, and playing a bigger role in the healthcare market.''' '''IMS Health has consistently demonstrated it is the definitive source of critical data and services to the evolving healthcare industry,''' said Jonathan Coslet, Senior Partner, TPG. '''We are pleased to join with our long-time partner, CPP Investment Board, and a talented management team to continue the growth of this outstanding franchise.''' '''We are pleased to make a significant investment in IMS Health which is the market leader in its industry with a strong customer base,''' said Mark Wiseman, Senior Vice President, Private Investments, for CPP Investment Board.[3] US''' Investment funds TPG Capital and the CPP Investment Board have agreed a $5.2bn deal to acquire healthcare researcher IMS Health.[19] IMS, founded in 1954, will be taken private by TPG Capital and the CPP Investment Board in a deal structured as a leveraged buyout in cash and debt.[15] Private equity firms were shut off from striking traditional LBOs after the credit crisis limited access to cheap debt, but in the past few months, deal flow has been picking up again. Excluding debt, the $22-a-share cash deal is the biggest leveraged buyout since Bristol-Myers Squibb Co ( BMY.N ) sold its ConvaTec unit to Avista Capital and Nordic Capital in August 2008 for $4.1 billion, according to data from Thomson Reuters.[7]
A day before to that, news reports prompted speculation that the company could be sold to a private equity firm, potentially at a 30 percent premium, according to The Associated Press. IMS said that the deal had fully committed financing and that its board had unanimously approved the buyout. "This transaction enables our shareholders to realize substantial value from their investment in IMS with an immediate cash premium, while at the same time strengthening our position to capture long-term growth opportunities," David R. Carlucci, the IMS chairman and chief executive, said in a statement.[5] The announcement comes after weeks of speculation following media reports in October that the company was up for auction. IMS expects the deal to close by the end of Q1 2010 and was approved by its board of directors. Chairman and CEO David R. Carlucci said, "This transaction enables our shareholders to realize substantial value from their investment in IMS with an immediate cash premium, while at the same time strengthening our position to capture long-term growth opportunities."[20]
CPP Investment Board is one of Canada's largest pension funds. "This transaction enables our shareholders to realize substantial value from their investment in IMS with an immediate cash premium, while at the same time strengthening our position to capture long-term growth opportunities," said IMS Chairman and CEO David R. Carlucci in a statement. IMS tracks pharmaceutical prescriptions and sales, and counts some of the largest drug developers as its clients.[17] "In addition to that we've worked on several other direct transactions together, several of which have been consummated and several others, as you expect in our business, that never got to the finish line." "When they identified this opportunity a couple months ago, we were a natural partner for them and they contacted us." Wiseman said the IMS transaction fits somewhere in the middle of the CPP Investment Board's risk-return spectrum and he has high hopes for the company's future. "This is a company that has an extremely strong market position," Wiseman said. "It's got very high and stable cash flow from recurring contractual relationships, and a very strong customer base. We just see it as a very strongly positioned company in its market, and we're very excited about the prospect of being able to partner with the management team and TPG to purchase it." IMS chairman and CEO David Carlucci said the transaction will allow the company's shareholders to realize "substantial value" from their investment.[4]
The transaction is slated to close by the 2010 first quarter, pending completion of IMS shareholders, regulatory approvals and customary closing conditions. 'We are pleased to make a significant investment in IMS Health which is the market leader in its industry with a strong customer base," said Mark Wiseman, senior vice-president of private investments for CPP Investment Board.[18]
LBOs, which involve the buyer borrowing most of the money to fund the deal and putting up the takeover target's assets as collateral, had fallen by the wayside during the recession as credit markets dried up. This latest deal indicates that private-equity firms are no longer sitting on the sidelines and are willing to jump back into the market. Mark Wiseman, senior vice-president of private investments for the CPP Investment Board, said the financial details of the transaction won't be released until it has closed, but he confirmed that TPG will be the majority owner while the two funds will jointly control IMS's board.[4]
The real premium is closer to 50%. That's the value relative to where IMS traded before the Wall Street Journal reported last month that the company was'deep in negotiations for a takeover. They are selling out of a company that traded'at about $34 a share'at its high two years ago, and one that was trying to execute on its own turnaround after warning about a performance shortfall in July. IMS's earnings are expected to decline 9% this year, and another 2.5% next year. Presumably, those turnaround opportunities - presumably - are' what made IMS so attractive to private equity firm TPG and the Canada Pension Plan, the buyers. It's the biggest LBO of the year. The question becomes how it is TPG manages to monetize its investment once it's executed on the turnaround.[21] Private equity firm TPG and the Canada Pension Plan will pay $4 bil for the prescription-drug-sales data provider.[22]
TPG''Capital and the Canada Pension Plan have agreed to buy IMS Health (NYSE: RX), a provider of data on prescription drug sales, for $22 per share (50% premium to last Friday's closing price).[3] IMS shareholders are getting $22 per share under the deal, marking a 31 per cent premium to the stock's closing price of $16.81 on the New York Stock Exchange on Wednesday.[18] Shares of IMS, which last month confirmed it was exploring strategic alternatives, soared 23.3 percent to close at $20.73 on the New York Stock Exchange. The deal represents a 31 percent premium on the share price on Wednesday, and a 50 percent premium on the closing share price on Oct. 16, the day before IMS said it was considering its strategic alternatives.[7]
Under the agreement, IMS shareholders will receive $22.00 cash for each share of IMS common stock they own, representing a premium of approximately 50 percent over the closing share price on Friday, October 16, 2009, the last trading day prior to public speculation that IMS was considering its strategic alternatives.[23] Under the agreement, expected to close during the first quarter of 2010, IMS shareholders will receive $22 per share. That's about 50% more than the closing price on Oct. 16, the last trading day before public speculation of a sale began.[24]
Under the terms of the deal, structured as a leveraged buyout, shareholders will get $22 a share in cash a 31 percent premium above Wednesday's closing price of $16.81.[15] The $22 a share cash deal could be one of the year's largest leveraged buyouts.[12]
IMS Health's ( RX ) shares shot up 23%. The deal was the biggest leveraged buyout of this year.[22]
Norwalk-based IMS Health, a provider of health care data, said Thursday that it will be acquired by two private investment funds in a deal valued at $5.2 billion, sending its shares soaring 23 percent.[15] Two investment companies will acquire pharmaceutical database firm IMS Health for $5.2 billion, which includes assumption of $1.2 billion in debt.[24] The leveraged buyout deal, which has committed debt financing from the private-equity firms and Goldman Sachs affiliates, is valued at $5.2 billion including assumed debt, according to IMS. LBOs, which involve the buyer borrowing most of the money to fund the deal and putting up the takeover target's assets as collateral, had fallen by the wayside during the recession as credit markets dried up. This latest deal proves that private-equity firms are no longer sitting on the sidelines and are willing to jump back into the market.[17] The company (NYSE:RX), based in Norwalk, Conn., said Thursday the leveraged buyout deal is valued at US$5.2 billion including the assumption of debt.[4]
Given TPG's heft, it could have partnered with a number of funds to purchase the health company. TPG was recognized this year as the world's top private-equity fund after raising US$52.3-billion in capital over the last five years, outpacing other noteworthy giants such as Carlyle Group and Kohlberg Kravis Roberts. It is noted for its success in buyout deals involving J. Crew, Burger King and Continental Airlines. It approached CPPIB a few months ago about working on the IMS acquisition. "TPG probably didn't want, or couldn't, speak for all of the equity on its own. Rather than calling the other usual suspects, they are partnering with CPPIB," said David Snow, New York-based executive editor of PEI Media, a firm that follows the private-equity industry. "They are calling on a group that has the money, but also the ability to execute such a deal because you have to perform the due diligence in a professional way and a short manner of time whereas most funds aren't equipped to do that."[6] CPPIB first surprised markets with word it had joined with TPG Capital, one of the world's leaders in private equity, to acquire IMS Health Inc. for US$5.2-billion. The two investors said they were prepared to pay US$22 a share for the Norwalk, Ct. -based company that provides prescription data to drug makers and analysts.[6] Last month, the Wall Street Journal published a report that claimed IMS Health was in talks with several private equity firms regarding selling the company.[2]
A day prior, media reports prompted speculation that the company could be sold to a private equity firm, potentially garnering a 30 percent premium. IMS said its board of directors unanimously approved the buyout.[17]
TPG Capital is the global buyout group of TPG, a leading private investment firm founded in 1992 with approximately $45 billion of assets under management and offices in San Francisco, London, Hong Kong, New York, Fort Worth, Washington, D.C., Melbourne, Moscow, Mumbai, Paris, Luxembourg, Beijing, Shanghai, Singapore and Tokyo.[3] TPG Capital is the global buyout group of TPG, which has US$45 billion of assets under management and investments and offices around the world. Its health-care investments have included medical device maker Biomet, drug developer Axcan Pharma, and clinical research company Quintiles Transnational.[4]
TPG Capital has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, joint ventures and restructurings.[3]
The buyers are private-equity firm TPG Capital and the investment board of the Canada Pension Plan. IMS headquarters are in Norwalk, Conn., but its major employment center - with about 1,000 people - is in Blue Bell.[14] TPG is the bigger investor of the pair, said Mark Wiseman, senior vice president of private investments at Canada Pension Plan Investment Board. "We have a very longstanding relationship with TPG, so we were working with them on this opportunity from the outset," Wiseman said.[7]
The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and retirees.[4] Headquartered in Toronto, with offices in London and Hong Kong, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm'''s length from governments.[3]
The IMS deal has fully committed financing, consisting of a combination of equity to be invested by TPG and the Canada Pension Plan, and debt financing to be provided by Goldman Sachs.[12] The transaction, as structured, will be financed through equity investments from TPG and CPPIB, with Goldman Sachs & Co. providing debt financing.[6]
Today it was confirmed that the firm has entered into a definitive agreement to be acquired by investment funds managed by TPG and the CPPIB. The deal was unanimously approved by the IMS Board of Directors.[2] Apax'''s Trizetto Group buyout was the only other health care transaction in last year'''s U.S. top 10, and none of the other entries on the 2009 list are in the category, according to Dealogic. Six of the top 10 U.S. buyouts this year have been in the financial sector. After IMS, the second biggest deal announced this year was Blackstone Group'''s agreement for Busch Entertainment Corp., worth $2.3 billion plus earn-outs.[25] The deal tops last year'''s $4.1 billion buyout of ConvaTec, the wound care and ostomy products division of Bristol Myers Squibb Co., by Avista Capital Partners and Nordic Capital.[25]
With $2.3 billion in 2008 revenue and more than 50 years of industry experience, IMS offers leading-edge market intelligence products and services that are integral to clients''' day-to-day operations, including product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity and the delivery of quality healthcare worldwide.[3] The company had $2.3 billion in revenue during 2008. TheStreet.com, in a Nov. 5 article titled, "IMS Health Is Being Stolen," criticized the acquisition agreement, saying the "cash-printing machine" with no competitors was being sold for far below its value.[24]
Factors that could cause or contribute to such differences include, but are not limited to (i) uncertainties associated with the outcome of IMS Health'''s exploration of strategic alternatives, (ii) regulatory, legislative and enforcement initiatives, particularly in the areas of data access and utilization and tax, (iii) the risks associated with operating on a global basis, including fluctuations in the value of foreign currencies relative to the U.S. dollar, and the ability to successfully hedge such risks, (iv) to the extent unforeseen cash needs arise, the ability to obtain financing on favorable terms, (v) to the extent IMS Health seeks growth through acquisitions and joint ventures, the ability to identify, consummate and integrate acquisitions and joint ventures on satisfactory terms, (vi) the ability to develop new or advanced technologies and systems for its businesses on time and on a cost-effective basis, (vii) deterioration in economic conditions, particularly in the pharmaceutical, healthcare or other industries in which IMS Health'''s customers operate, and(viii) uncertainties associated with completion of IMS Health'''s restructuring plans and the impact of the restructuring activities on IMS Health'''s business and financial results, including the timing of the activities and the associated costs and the ability to achieve projected cost savings and (ix) the anticipated timing of filings and approvals relating to the transaction; the expected timing of the completion of the transaction; and the ability to complete the transaction considering the various closing conditions.[23] IMS may be a harbinger for many smaller transactions in the health care data and IT space, where companies are looking to sell for multiples of as high as eight to ten times Ebitda, said O'''Connor.[25]
Showing how much the debt markets have come back since then, IMS'''s debt financing is being underwritten wholly by Goldman Sachs Co., whose loan and mezzanine affiliates will hold on to a substantial amount of the debt and sell some to additional parties, people familiar with the matter said. IMS operates in a sector that has only a handful of players, and IMS might well have been '''the only one you could buy in the space,''' according to Tom O'''Connor, a managing director with Berkery Noyes Co. He added that there was likely not much strategic interest in the asset, explaining why private equity was able to put together a winning bid. IMS''' main competitor SDI likely had little appetite for another acquisition after its purchase of Verispan last year, for instance. Health care is certainly a sector where PE eyes have been peeled for some time, given its reputation as safe during a downturn.[25] At the September Private Equity Analyst Conference, during a discussion of which sectors were the most attractive, health care came up several times.[25]
'With the backing of world-class private equity partners, we will continue our focus on expanding into new markets, further improving the quality and depth of offerings we deliver to our clients, and playing a bigger role in the health care market."[18] "With the backing of world-class private equity partners, we will continue our focus on expanding into new markets, further improving the quality and depth of offerings we deliver to our clients, and playing a bigger role in the health care market," said David R. Carlucci, IMS chairman and CEO.[1]
Winston's private equity deal team in Chicago may actually be a bit larger than what DeChiara has been leading in New York. He declin.[3] Produced by the editors of Dow Jones LBO Wire and Private Equity Analyst, Private Equity Beat provides an inside view into the latest buyout deals and emerging trends in the world of private equity.[25] The newspaper, quoting sources, notes that it would mark the biggest leveraged buyout of the year if completed, in the best sign yet that stronger markets are boosting the fortunes of private equity players.[9]
"We are an investor and have been for several years in (TPG's) private equity funds," Wiseman said in an interview Thursday.[4]
Much has been written recently about whether venture capital and/or private equity funds should be regulated. The general idea behind proposed regulation is that any entity that could pose a risk to the nation'''s financial network should be regulated to try to ensure that we avoid the messes that got us into this current recession.[3] For more information on Dow Jones products covering private equity and other financial markets, go to www.fis.dowjones.com.[25]
The deal, which drew interest from a number of rival private-equity firms, is the latest sign that improving financial markets have started to ease access to capital, rebuild corporate share prices and repair confidence shattered by last year's credit crisis. [13] The agreement, which will see IMS stockholders receive $22 per share, has been unanimously approved by the firm'''s board of directors and is due to be completed ''' subject to shareholder approval ''' during the first quarter of 2010.[19] In trading on the New York Stock Exchange on Thursday, IMS Health shares rose US$3.86 to $20.67, a gain of 23 per cent on a volume of 45.3 million shares.[4] DG FastChannel Inc. ( NASDAQ:DGIT ) was another stock which made a new 52 week high of $25.75 and now trades at $24.83, increased by 16.33%.The company announced today that it has executed a media services agreement with Google.[26]
TPG, the former Texas Pacific Group, has about $45 billion of assets under management. Its health care investments have included medical device maker Biomet, drug developer Axcan Pharma, and clinical research company Quintiles Transnational.[17] IMS Health is nearing a deal to sell itself for nearly $4 billion, the WSJ reports.[27] IMS Health Inc., which provides market research to the pharmaceutical and health-care industries, said today that it agreed to be acquired for $5.2 billion, including the assumption of debt.[14] The transaction has a total value of $5.2 billion, including the assumption of debt.[28] The total deal would be valued at around $5.2 billion, including the assumption of debt.[3]
The company, based in Norwalk, Conn., said Thursday the deal is valued at $5.2-billion including the assumption of debt.[18]
Wiseman said that the deal was "capitalized reasonably conservatively, taking into account the low volatility of the company cash flow". The deal follows a spate of deals in the wider healthcare and pharmaceuticals industry, such as Wyeth's $68 billion union with Pfizer Inc ( PFE.N ).[7] Nielsen Co, the market research firm formerly known as VNU NV, had tried to buy IMS in 2005, but walked away from the deal amid pressure from shareholders. It had been expected that the company would not be sold to a healthcare firm, sources previously said.[7] IMS came close to being bought by VNU in 2005, which is now the Nielsen Company, but the deal collapsed after VNU shareholders opposed it.[19]
IMS has said it will streamline organizations that do business in Europe, the Middle East and Africa, and reduce capacity and size of sales and management consulting teams in areas where demand is low. It plans instead to focus on higher-growth regions and on parts of its business including specialty pharmacy and patient-centered research, and service to payers and governments. IMS will carry a heavier debt load with this deal. [17] Mr. Wiseman would not disclose how much equity it is contributing, although noting it would be a "significant minority" investor should the deal close. Analysts reckoned the deal was likely heavily tilted toward equity, as debt financing is difficult to obtain in this marketplace.[6]
Beyond the #1 spots in each year, health care wasn'''t prominent among the biggest deals.[25] IMS' competitors in the health care data field are mainly privately held companies, including TNS Group Holdings and Cegedim SA. IMS earlier this year lowered its 2009 outlook as the weak economy and shifting health care market dynamics curbed customer spending and hurt revenue.[17] IMS Health then reported a 6% drop in third-quarter revenue to $540.8m, compared with $573.7m a year earlier.[2] IMS Health, which has operations in more than 100 countries, had $2.3 billion in 2008 revenue.[14]
Two-thirds - 65% - of doctors polled by IBD/TIPP oppose current health proposals from Congress and the White House, citing concerns about overall program costs and bureaucratic control of medicine. Many are intensely opposed to what they called "socialized" medicine, including a large. The consumer products giant will sell its prescription drug business, which had $2.3 bil in revenue last year, to Warner Chilcott, which specializes in women's health and dermatology.[22] The company last month reported a third-quarter loss due to hefty restructuring costs and said revenue slid 6 percent to $540.8 million, hurt by lower analytics and consulting revenue. The company has been cutting jobs and shifting its focus to businesses with faster growth.[17] The company today reported financial results for the third quarter ended September 30, 2009. It reported consolidated net revenues for the three months ended September 30, 2009 of $50.6 million, representing 25.7% year-over-year growth in U.S. dollars and 42.3% year-over-year growth in local currencies.[26]
Payments revenue grew 58.3% to $13.5 million from $8.5 million in the prior year period. Year-over-year revenue growth in both platforms was impacted by unfavorable currency exchange rates.[26]
The company had 2008 revenues of US$2.3 billion. Earlier this year, the company lowered its 2009 outlook as the weak economy and shifting health-care market dynamics curbed customer spending and hurt revenue.[4]
IMS is said to be looking at a bid in the low $20-per-share range, which would value the company at nearly $4 billion.[11] At June 30, 2009, the CPP Fund totaled $116.6 billion of which $18.4 billion represents private investments.[3] At the end of June, the CPP Fund had $116.6-billion (Canadian) assets, of which $18.4-billion were private investments.[18]
In order to build a diversified portfolio of CPP assets, the CPP Investment Board invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments.[3] Wiseman said TPG and the CPP Investment Board have a "long-standing and close relationship" and were natural partners for the IMS transaction.[4]
Mr. Wiseman said CPPIB and TPG have a long-standing relationship, as CPPIB is an investor in some TPG funds and the two have worked together in previous transactions. He added IMS was an attractive target as it is the only global player in its field, has robust cash flow and long-term contracts with clients.[6]
Goldman, Sachs & Co., BofA Merrill Lynch, Barclays Capital, Evercore Partners, and J.P. Morgan acted as financial advisors to TPG and CPPIB. Ropes & Gray LLP acted as legal advisor to TPG and CPPIB. CPPIB was also separately advised by Torys LLP.[3]
"IMS Health has consistently demonstrated it is a definitive source of critical data and services to the evolving health care industry," said Jonathan Coslet, senior partner at TPG. IMS has 7,500 employees globally and 1,900 in the United States in 24 offices.[15] IMS provides sensitive market data to many competing health care companies, so IMS feared it would lose customers if it aligned with one corporate buyer, sources said. "This is a strong defensive business with recurring cash flows, longstanding customer relationships, and it's an industry leader," said Wiseman. "For us to have an opportunity to invest a substantial sum into this kind of business, we think is very attractive in our portfolio."[7]
IMS Health provides sales analysis and medical audits to the pharmaceutical industry, has been the target of a second-round bidding process from several private-equity funds, which could alter TPG bid or force that fund to pay more, said the Journal. [11] In connection with the proposed merger of IMS Health Incorporated (the '''Company''') with Healthcare Technology Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of Healthcare Technology Holdings, Inc., a Delaware corporation, (the '''Merger'''), the Company will prepare a proxy statement to be filed with the SEC. When completed, a definitive proxy statement and a form of proxy will be mailed to the stockholders of the Company.[23] The Company'''s stockholders will also be able to obtain, without charge, a copy of the proxy statement and other relevant documents (when available) by directing a request by mail or telephone to IMS Health Incorporated, 901 Main Avenue, Norwalk, Connecticut 06851, telephone.[23]
The company compiles and stores data on prescription drug sales in more than 100 countries, reporting $2.3 billion in 2008 sales. This is a free content preview. [16] The company's cash flow has remained strong despite earnings weakness. IMS has said it remains on track to achieve its fiscal 2009 free cash flow guidance of $380 million.[17]
Additional information on factors that may affect the business and financial results of the company can be found in the filings of the company made from time to time with the Securities and Exchange Commission. [23] Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms.[7] Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance. He is a regular commentator and guest host on Business News Network.[9]
Shares were up nearly 24 percent in afternoon trading, having earlier set a new 52-week high of $21.09 on the news.[17] Shares of IMS, which last month confirmed it was exploring strategic alternatives, soared more than 24 percent to $20.90 in early trading.[12]
Stocks to Watch Today is a daily blog about key stock and market movements, written by Barrons.com stocks columnist Bob O'Brien. O'Brien updates this blog and provides video reports several times each trading day offering unique insight and analysis. O'Brien is a 14-year veteran of Dow Jones & Co., having most recently worked at Wall Street Journal Television, where he appeared daily on CNBC under the Journal's content-sharing agreement with NBC. Prior to WSJ Television, O'Brien was an equities market reporter at Dow Jones Newswires. [21] The board has investments in stocks, real estate, inflation-linked bonds, infrastructure and fixed income financial instruments.[4] The price per-share represents a premium of 50% over the closing price of IMS stock on 16 October, the day before the rumours were reported.[19]
The transaction is slated to close by the first quarter of 2010, pending completion by IMS shareholders, regulatory approvals and customary closing conditions.[4] Completion of the transaction is subject to approval of IMS shareholders, regulatory approvals and customary closing conditions and is expected to occur by the end of the first quarter of 2010.[3]
CPPIB also moved, in conjunction with the Ontario Teachers Pension Plan Board, to table a US$6.2-billion offer for Australia's Transurban Group. [6] The CPP is headquartered in Toronto and has offices in London and Hong Kong and is governed and managed independently of the Canada Pension Plan.[18]
SOURCES
1. IMS Health being sold for $5.2B | Philadelphia Inquirer | 11/05/2009
2. Daily Research News Online no. 10809 - IMS Health to be Sold for $5.2bn
3. peHUB » TPG, CPP To Buy IMS Health for $5.2 Billion
4. IMS Health to be bought by investment funds TPG Capital, CPP Investment for US$4 billion | CFTKTV
5. TPG and Pension Plan to Buy IMS Health - DealBook Blog - NYTimes.com
6. CPP flexes buyout muscle in deals worth US$11B
7. UPDATE 3-IMS agrees to $4 bln deal, biggest LBO this year | Deals | Mergers & Acquisitions | Reuters
8. IMS Health To Be Acquired For $4B By TPG, Canada Pension Plan - WSJ.com
9. CPP eyes $4-billion LBO deal - The Globe and Mail
10. IMS Health nears deal to sell itself to TPG and Canada Pension Plan
11. IMS Health, Inc. Surges 16% On Potential Buyout Deal | Benzinga.com
12. UPDATE 1-TPG, Canada Pension agree to $4 bln IMS buyout - Forbes.com
13. FT.com / Companies / US & Canada - IMS Health in $5.2bn leveraged buy-out
14. IMS Health bought for $5.2 billion | Philadelphia Inquirer | 11/05/2009
15. IMS Health Sold For $5.2 Billion -- Courant.com
16. IMS Health will be bought by TPG, CPP (Dealscape - Pipeline)
17. The Associated Press: IMS Health to be bought for $4 billion by TPG, CPP
18. CPPIB in deal for health data firm - The Globe and Mail
19. Investment funds to buy IMS Health in $5.2bn deal | News | Research
20. IMS Health Is Being Bought By TPG Capital And CPP Investment Board For $4 Billion (RX) - Comtex SmarTrend Alert
21. How Do You Get Out Of IMS Health - Stocks To Watch Today - Barrons.com
22. Investors.com - IMS Health jumps on $4 bil deal
23. IMS Health to be Acquired by TPG and CPP Investment Board
24. IMS Health's Price: $5.2 Billion
25. With IMS Deal, Health Care Is Back On Top - Private Equity Beat - WSJ
26. 52-Week high Stocks ''' RX, DGIT, MELI
27. IMS Health for Sale - Health Blog - WSJ
28. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
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