Now this is healthcare reform I can agree with!
My holding IMS Health, Inc. (NYSE: RX) entered into a definitive agreement today to be acquired for $4 billion by Texas private equity firm TPG Capital and CPP Investment Board of Toronto. TPG (formerly Texas Pacific Group) has roughly $45 billion in capital under management, according to its website. CPP Investment Board invests assets on behalf of the Canadian Pension Plan.
The deal is the largest leveraged buyout of 2009. IMS Health, based in Norwalk, Conn., provides business and information-technology services to pharmaceutical and health care firms. The company, which reported sales of $2.3 billion last year, has operations in more than 100 countries around the world.
Under the agreement, IMS stockholders will receive $22 cash for each share of IMS common stock they own, representing a 30% premium over yesterday’s closing price, and 70% gain since my purchase on August 10th at $12.93. The deal is expected to close during the first quarter of 2010.
Here’s what’s really special about the deal. Back in August I had calculated IMS’ Intrinsic Value at $21.70. That’s the price I’ve been waiting for to let go of the stock. I’m pleased to get confirmation from the private investors (TPG and CPP) that my analysis was correct (even though someone over at TheStreet.com thinks IMS is worth much more).
Wasn’t expecting another stock to reach its Intrinsic Value this soon, though I’m very happy to oblige.
This weekend I got more confirmation that my Intrinsic Value calculations are correct. I was reading an Outstanding Investors Digest interview with Bruce Berkowitz of Fairholme fund. In it Bruce gave his estimates of 2009 owner earnings (free cash flow) for Pfizer and Forest Labs, two of my other holdings. My own estimates are in line with his. Makes me feel I do have a ‘prescription for success’, knowing how good of a stockpicker Bruce Berkowitz is.