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TriZetto, IMS to alter deal?
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April 19, 2000: 1:59 p.m. ET
Stock in health care companies rise as they ponder changes to merger deal
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NEW YORK (CNNfn) - Shares of TriZetto Group Inc. and IMS Health both traded higher Wednesday afternoon after the companies announced they were reevaluating their controversial multibillion merger agreement signed just three weeks ago.
The deal, initially valued at $4.8 billion, has drawn close scrutiny from investors for its unusual structure whereby TriZetto, a three-year old Internet health care company, is buying the larger, more established IMS, a health care researcher.
Both companies have been hammered on Wall Street since signing the deal. TriZetto (TZIX: Research, Estimates) lost more than 70 percent of its market value during that period, while IMS (RX: Research, Estimates) fell by roughly 25 percent, effectively cutting the deal's value in half.
But by early Wednesday afternoon, TriZetto shares jumped 5, or nearly 30 percent, to 22, while shares of IMS climbed 1-5/16 to 17-8/16 as investors reacted to word the two companies were pondering a change to their agreement.
 In a joint statement released late Tuesday, the companies said they were evaluating "potential alternatives" regarding how the deal is structured. The companies provided no further details and said they would not make any further announcements "unless and until a definitive agreement is reached."
Under the current deal structure, the Westport, Conn.-based IMS will own about 85 percent of the combined company's outstanding shares. However, IMS was technically considered the acquisition target because of TriZetto's higher stock price.
The companies had also planned to distribute three separate securities to their shareholders: one representing IMS' core pharmaceutical market-research and sales-management businesses, one for the faster-growing businesses of the current TriZetto and IMS' application software and services unit, and one representing an IMS unit that provides automated sales support technologies to the pharmaceutical industry. 
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