Mega-LBOs Shrinking & IMS Health is Proof

TPG Capital and the Canada Pension Plan Investment Board have entered into a deal to acquire IMS Health (NYSE: RX) for $22 per share, or $4 billion. Including assumed debt the deal is valued at approximately $5.2 billion. The buyout already has fully committed financing - TPG and CPPIB are reportedly providing 40% of the deal amount in equity with the remaining 60% being provided by principal loans and mezzanine funds managed by Goldman Sachs and GS Capital Partners. IMS Health provides market intelligence to pharmaceutical and healthcare industries worldwide.

The IMS Health deal tops the Clayton, Dubilier & Rice-sponsored $2.9 billion recap of JohnsonDiversey for the largest private equity-backed deal announced so far in 2009, according to the PitchBook Platform. However, it is still a far cry from the mega-deals of 2007 and 2008 - the $4 billion deal comes in as only the 34th largest LBO for the past three years, right between The Weather Channel and ConvaTec deals. IMS Health's 40% equity financing and lack of bank provided debt also shows that the easy and cheap debt that fueled the boom in '07 and '08 is still not available. Based upon this, odds are it may be a while before a deal can break into the top 20 biggest LBOs.