IMS plans merger talk, as fears of data-mining ban ease

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IMS Health convened a special meeting to vote on its $4.2-billion buyout offer, in what some consider a move to restore investor confidence in the deal.

At the special meeting, set for Feb. 8, stockholders of record at close of business Dec. 28 will be entitled to vote on the buyout. The company announced last month that it will be bought by investment funds TPG Capital and CPP Investment Board in a leveraged buyout worth $22 per share, marking a 31% premium to IMS shares' closing price before the offer. The deal is valued at $5.2 billion, including assumed debt.

But last Friday, IMS shares plunged as reports swirled of a possible congressional amendment banning the collection of physicians' prescribing data for marketing purposes. Not only does the firm derive a portion of its profit from such data sales, but analysts said investors may have been expressing concern that the congressional proposal could have imperiled IMS's buyout deal.

News of the vote appeared to ease those concerns. John Kreger, an analyst with William Blair, interpreted the vote as a “good sign” and “a signal that everything is on track, and the amendment hasn't had an impact on the process,” as reported in TheStreet.com. Shares have since rebounded, a sign the market agrees with his prediction.

Even before IMS announced the meeting, a member of the staff of Sen. Herb Kohl (D-WI), a main sponsor of the amendment, told Reuters that a data-mining ban is unlikely to be included in the Senate's overall health reform bill.

Even if the proposal does become law, which Kreger thinks is also unlikely, he doesn't think it will have more than a 5% impact on IMS's earnings.

IMS issued another statement last Friday that the issue of data restriction has been considered by, and rejected by, a majority of states. In the past two years, the company said, more than two dozen states have considered similar data restriction legislation, but none have passed it.
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