(Bloomberg) — IMS Health Holdings Inc. (NYSE:IMS) will buy Quintiles Transnational Holdings Inc. (NYSE:Q) 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.
The transaction values IMS Health at $26.53 a share, below its closing price of $26.87 on Monday. The stock dropped 7.4 percent to $24.87 at 10:50 a.m. in New York. Quintiles declined 7.6 percent to $63.86.
The new company can aid pharmaceutical and biotech companies facing a tougher road to get new treatments approved, IMS Health and Quintiles executives said on a conference call.
“We will improve clinical trial design, accelerate recruitment, and drive efficiencies in clinical trial execution,” IMS Health Chief Executive Officer Ari Bousbib, who will lead the combined company, said on the call.
The deal, which the companies expect to complete in the second half, will add to 2017 earnings excluding some items. The combined business will have an enterprise value of more than $23 billion, the companies said. The equity value of the transaction is based on IMS’s 336 million shares outstanding.