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NEWS21 October 2009

IMS Health confirms it is exploring ‘strategic alternatives’

M&A North America

US— The board of directors at IMS Health said last night that a special committee had been formed to look into “a variety of strategic alternatives” for the firm, following reports that private equity groups were circling the company.

In a statement IMS said: “There can be no assurance that the exploration of strategic alternatives will result in a transaction.”The firm said it would make no further comment while the exploration process continued.

The announcement followed a report in the Wall Street Journal that the company was in talks with three private equity houses over a possible $3.5bn takeover.

IMS shares rose 21% to more than $17 with the news, after spending much of the year below $14, down from a high of $16 at the start of the year as the company’s sales and earnings took a battering from the economic downturn and healthcare market-specific challenges, such as the loss of patent exclusivity on drugs and expected client mergers.

The company is due to report its third-quarter results tomorrow but in the second quarter revenue was down 13% to $522m while net income fell 19% to $63.7m. For the first half of the year revenue was down 11% to $1.05bn although profit climbed 42% to $198.2m.

To combat the downturn, IMS said it would cut 850 jobs worldwide, or just over 10% of its workforce, having axed 10% of its workforce the previous year.