IMS Health (IMS) and Quintiles (Q) announced that their respective boards approved a definitive merger agreement, pursuant to which the companies will be combined in an all-stock merger of equals transaction. The merged company will be named Quintiles IMS Holdings.

Based on the closing of IMS Health and Quintiles common stock prices on May 2, 2016, the equity market capitalization of the joined companies is more than $17.6B and the enterprise value is more than $23B. The 2015 pro forma reported revenue for Quintiles IMS was $7.2B; adjusted EBITDA was $1.7B and adjusted unlevered free cash flow was $1.3B.

Under the terms of the merger agreement, IMS Health shareholders will receive a fixed exchange ratio of 0.384 shares of Quintiles common stock for each share of IMS Health common stock. Upon completion of the merger, IMS Health shareholders will own approximately 51.4 percent of the shares of the combined company on a fully diluted basis and Quintiles shareholders will own approximately 48.6 percent of the combined company on a fully diluted basis.

The companies expect the merger to accelerate revenue growth, adding 100-200 basis points to a combined annaul growth rate by the end of year three. Expects to achieve annual run-rate cost savings of $100M by the end of year three. The company expects the transaction to be accretive to adjusted EPS in 2017. The merger is expected to maintain financial flexibility with combined gross and net leverage as of December 31, 2015 of 4.0 times and 3.2 times adjusted EBITDA, respectively.

The transaction is expected to optimize ultization of both companies' tax assets. The transaction is subject to customary closing conditions, including regulatory approvals and approval by both IMS Health and Quintiles shareholders and is expected to close in the second half of 2016.