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IMS Health, Quintiles to combine in all-stock merger of equals

IMS HealthHoldings Inc. and Quintiles Transnational Holdings Inc. agreed tocombine in an all-stock merger of equals transaction with combined equitymarket capitalization of $17.6 billion and combined enterprise value of morethan $23 billion, based on the companies' May 2 closing prices.

IMS Health shareholders will receive a fixed exchange ratioof 0.384 Quintiles common shares for each IMS Health common share. When the dealcompletes, IMS Health shareholders will own approximately 51.4% of the combinedcompany on a fully diluted basis, while Quintiles shareholders will own theremaining 48.6%.

The companies believe that the transaction will providecapabilities to address health care operations with a market opportunity ofmore than $230 billion. They expect annual run-rate cost savings of $100million by the end of year three. The deal should be accretive to adjusted EPSin 2017.

The combined company will be renamed Quintiles IMS HoldingsInc., and expects to maintain dual headquarters in Danbury, Conn., and ResearchTriangle Park, N.C.

IMS Health Chairman and CEO Ari Bousbib will become chairmanand CEO of the combined organization, while Quintiles CEO Tom Pike will becomevice chairman. As for the board, Quintiles and IMS Health will appoint sixdirectors each.

The transaction is expected to close in the second half of2016, subject to regulatory approvals and approval by the companies'shareholders. IMS Health shareholders owning approximately 54% of IMS stock andQuintiles shareholders owning approximately 25% of the company have enteredinto agreements to vote in favor of the deal. The companies plan to refinancecertain debt in connection with the merger. Committed financing has beenobtained.

IMS Health's legal adviser is Weil Gotshal & Manges LLPand its financial adviser is Goldman Sachs & Co. Morris Nichols Arsht &Tunnell LLP served as legal adviser to the independent committee of the IMSHealth board. Quintiles' legal advisers are Bryan Cave LLP and Smith AndersonBlount Dorsett Mitchell & Jernigan LLP, and its financial adviser isBarclays. Simpson Thacher & Bartlett LLP served as legal adviser toQuintiles' independent directors.