IMS Health is being stolen

It was announced Thursday that IMS Health was to be stolen from its shareholders for $4 billion or about $22 share; a private equity firm will buy them out.

IMS Health is being stolen

It was announced Thursday that IMS Health was to be stolen from its shareholders for $4 billion or about $22 share; a private equity firm will buy them out. IMS Health should have free cash flows this year over $340 million (the actual number should be higher than $400 million, but is benefited by a $60 million onetime tax benefit).

So this company, which has virtually no competition, has barriers to entry impossible for a new entrant to overcome, and a cash printing machine will be sold for about 12 times free cash flows. Over the past year we’ve seen much lower quality companies being sold for much higher valuations than this.  Most recently, Burlington Northern Santa Fe, which has a significant competitive advantage but has far inferior return on capital and free cash flow generation than IMS, is to be purchased by Mr. Buffett for about 20 times earnings and 30 or more times free cash flows. IMS Health’s management and board have a history of making dumb capital allocation decisions, but this one may go down in history as their dumbest.

We own these shares and will probably hold on to them in the hope that shareholders will refuse this offer.

Please read the following important disclosure here.

Enjoyed this read?

Share it with someone who’d love it too!

New to investing?

Explore these valuable guides to get started.

Value Investing
Student
Curriculum

The 6
Commandments
of Value
Investing

Letter to
a Young
Investor

Related Articles

Current thoughts on Tesla (TSLA)

Current thoughts on Tesla

Tesla market value of $780 billion mostly reflects Elon's future dreams, not car sales. The reality? Only $100-180 billion tied to the actual vehicle business.
Europe Can’t Hide Behind America Anymore

Europe Can’t Hide Behind America Anymore

Americans have always outspent Europe on defense, but to be fair, we have a currency advantage. Our military might elevated our currency to reserve status.
Europe’s New Status: The Children’s Table (IMA Client Dinner 2025 Video)

IMA’s March 2025 Client Dinner Video

Once a year, my company, IMA, hosts a dinner for our clients. Most of them live outside of Denver—and many outside the U.S.—so this event gives us a rare and meaningful chance to meet face-to-face, often for the first time, and really get to know each other.
The Reputational Bankruptcy of the American Dollar

The Reputational Bankruptcy of the American Dollar

The US dollar will likely continue to get weaker, which is inflationary for the US. Let me start with some easily identifiable reasons.

Leave a Comment