By Kristine Owram And John Valorzi, The Canadian Press

TORONTO - Canada's CPP Investment Board will become a "significant minority investor" in IMS Health after the big U.S. health care software and data management company agreed Thursday to be acquired by the big Canadian pension fund and its American partner for US$4 billion.

The CPP Investment Board and TPG Capital will pay IMS shareholders $22 per share under the deal, marking a 31 per cent premium to the stock's closing price of US$16.81 on the New York Stock Exchange on Wednesday.

The company (NYSE:RX), based in Norwalk, Conn., said Thursday the leveraged buyout deal is valued at US$5.2 billion including the assumption of debt.

LBOs, which involve the buyer borrowing most of the money to fund the deal and putting up the takeover target's assets as collateral, had fallen by the wayside during the recession as credit markets dried up. But this latest deal indicates that private-equity firms are no longer sitting on the sidelines and are willing to jump back into the market.

Mark Wiseman, senior vice-president of private investments for the CPP Investment Board, said the financial details of the transaction won't be released until it has closed, but he confirmed that TPG will be the majority owner while the two funds will jointly control IMS's board.

TPG is the former Texas Pacific Group. The CPP Investment Board is one of Canada's largest pension funds.

Wiseman said TPG and the CPP Investment Board have a "long-standing and close relationship" and were natural partners for the IMS transaction.

"We are an investor and have been for several years in (TPG's) private equity funds," Wiseman said in an interview Thursday. "In addition to that we've worked on several other direct transactions together, several of which have been consummated and several others, as you expect in our business, that never got to the finish line."

"When they identified this opportunity a couple months ago, we were a natural partner for them and they contacted us."

Wiseman said the IMS transaction fits somewhere in the middle of the CPP Investment Board's risk-return spectrum and he has high hopes for the company's future.

"This is a company that has an extremely strong market position," Wiseman said.

"It's got very high and stable cash flow from recurring contractual relationships, and a very strong customer base. So we just see it as a very strongly positioned company in its market, and we're very excited about the prospect of being able to partner with the management team and TPG to purchase it."

IMS chairman and CEO David Carlucci said the transaction will allow the company's shareholders to realize "substantial value" from their investment.

"With the backing of world-class private equity partners, we will continue our focus on expanding into new markets, further improving the quality and depth of offerings we deliver to our clients, and playing a bigger role in the health-care market," Carlucci said in a release.

The transaction is slated to close by the first quarter of 2010, pending completion by IMS shareholders, regulatory approvals and customary closing conditions.

IMS Health operates in more than 100 countries and is the world's leading provider of market intelligence to the pharmaceutical and health-care industries. The company had 2008 revenues of US$2.3 billion.

Earlier this year, the company lowered its 2009 outlook as the weak economy and shifting health-care market dynamics curbed customer spending and hurt revenue. The company last month reported a third-quarter loss due to hefty restructuring costs and said revenue slid six per cent to US$540.8 million, hurt by lower analytics and consulting revenue.

TPG Capital is the global buyout group of TPG, which has US$45 billion of assets under management and investments and offices around the world. Its health-care investments have included medical device maker Biomet, drug developer Axcan Pharma, and clinical research company Quintiles Transnational.

The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and retirees.

At the end of June, the CPP fund had C$116.6 billion in assets, of which $18.4 billion were private investments. The board has investments in stocks, real estate, inflation-linked bonds, infrastructure and fixed income financial instruments.

The CPP is headquartered in Toronto and has offices in London and Hong Kong. It is governed and managed independently of the Canada Pension Plan.

In trading on the New York Stock Exchange on Thursday, IMS Health shares rose US$3.86 to $20.67, a gain of 23 per cent on a volume of 45.3 million shares.