EX-99.1 2 nt10025562x3_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On February 24, 2021, ICON entered into a Merger Agreement with PRA Health Sciences, Inc. (“PRA”), ICON US Holdings Inc., a Delaware corporation and subsidiary of ICON (“US HoldCo”), and Indigo Merger Sub, Inc., a Delaware corporation and subsidiary of ICON and US HoldCo (“Merger Subsidiary”). Upon the terms and subject to the conditions of the Merger Agreement, Merger Subsidiary will merge with and into PRA (the “Merger”), with PRA surviving as a subsidiary of ICON and US HoldCo (the “Surviving Corporation”). The following unaudited pro forma condensed combined financial information of ICON and PRA is presented to illustrate the estimated effects of the Merger, which estimated effects are collectively referred to as adjustments or transaction accounting adjustments.

The Unaudited Pro Forma Condensed Combined Balance Sheet at March 31, 2021 is presented as if the Merger had occurred on March 31, 2021. The Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2020, the three month period ended March 31, 2020 and the three month period ended March 31, 2021 are presented as if the Merger had occurred on January 1, 2020, the beginning of the earliest period presented. These Unaudited Pro Forma Condensed Combined Statements of Operations and Unaudited Pro Forma Condensed Combined Balance Sheet are collectively referred to as the unaudited pro forma financial information. The unaudited pro forma financial information is based on the historical consolidated financial statements of ICON and PRA, and the assumptions and adjustments set forth in the accompanying explanatory notes.

The unaudited pro forma financial information for the Merger has been developed from and should be read in conjunction with the ICON audited consolidated financial statements contained in the ICON Form 20-F for the year ended December 31, 2020, the ICON unaudited condensed consolidated financial statements contained in the ICON Form 6-K for the three month period ended March 31, 2021, the PRA audited consolidated financial statements contained in the PRA Form 10-K for the year ended December 31, 2020 and the PRA unaudited condensed consolidated financial statements contained in the PRA Form 10-Q for the three month period ended March 31, 2021, which are incorporated by reference into this offering memorandum.

The Merger will be accounted for using the acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805 “Business Combinations” with ICON considered the acquirer of PRA.  ICON will record assets acquired, including identifiable intangible assets, and liabilities assumed from PRA, at their respective fair values at the date of completion of the Merger. For purposes of developing the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2021, the acquired PRA assets, including identifiable intangible assets, and liabilities assumed have been recorded at their estimated fair values with the excess purchase price assigned to goodwill as described under Note 3 to the Unaudited Pro Forma Condensed Combined Financial Information below.  The estimated fair values assigned in this unaudited pro forma financial information are preliminary and represent ICON’s current best estimate of fair value and are subject to revision. The unaudited pro forma financial information, prepared under Article 11 of Regulation S-X issued by the SEC, is provided for informational purposes only and is based on available information and assumptions that ICON believes are reasonable. It does not purport to represent what the actual consolidated results of operations or the consolidated financial position of the combined entity would have been had the Merger occurred on the dates indicated, nor is it necessarily indicative of future consolidated results of operations or consolidated financial position. The actual financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information, changes in value not currently identified and changes in operating results following the date of the pro forma financial information.

Upon closing of the Merger, each share of PRA common stock will be converted into 0.4125 of a share of ICON ordinary shares. This exchange ratio will not be adjusted for changes in the market price or number of shares outstanding of either ICON ordinary shares or PRA common stock between the date of signing the Merger Agreement and completion of the Merger.

For purposes of this unaudited pro forma financial information, giving effect to the exchange ratio described above, the estimated aggregate consideration to complete the Merger would have been $12.8 billion. This amount was derived based on the 64.77 million shares of PRA common stock (other than Cancelled Shares, Dissenting Shares and Subsidiary-Held Shares) outstanding on March 31, 2021, the cash consideration of $80.00 per share, the exchange ratio and a per share price of $223.76, which represents the closing price of ICON ordinary shares on May 31, 2021. The purchase price also includes the estimated fair value of $411.5 million for PRA equity awards held by employees of PRA that will be exchanged for ICON equity awards and the repayment of $1.3 billion of PRA's indebtedness.

The accounting standards require that the equity consideration transferred be measured at the date the Merger is completed at the then-current market price. This requirement will likely result in a total consideration that is different from the amount presented in this unaudited pro forma financial information. Based on the 64.77 million shares of PRA common stock outstanding as of March 31, 2021 and the exchange ratio, a 10% increase/(decrease) in the per share price of the ICON ordinary shares as of May 31, 2021 would result in an $629.3 million increase/(decrease) in the total consideration for the Merger, substantially all of which ICON expects would be recorded as an increase/(decrease) in the amount of goodwill. The number of outstanding shares of PRA common stock will change prior to the closing of the Merger due to transactions in the normal course of business, including the vesting and/or exercise of outstanding PRA equity awards. This change is not expected to have a material effect on this unaudited pro forma financial information.


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT MARCH 31, 2021

March 31, 2021
 
ICON Historical
 
PRA Historical
 
Reclassifications (See Section 4a)
 
Transaction Adjustments (See Section 3 & 4)
 
Notes
 
Pro Forma Surviving Corporation
 
ASSETS
 
(in thousands)
 
Current Assets:
                         
Cash and cash equivalents
 
$
942,455
 
$
690,259
 
$
 
$
(535,191)
   
3(a), 4(f)
 
$
1,097,523
 
Available for sale investments
   
1,729
   
   
   
         
1,729
 
Accounts receivable, net
   
659,710
   
   
585,569
   
         
1,245,279
 
Unbilled revenue
   
416,352
   
   
193,777
   
         
610,129
 
Accounts receivable and unbilled services, net
   
   
779,346
   
(779,346)
   
         
 
Other receivables
   
31,552
   
   
26,853
   
         
58,405
 
Prepayments and other current assets
   
87,273
   
126,156
   
(38,041)
   
(20,408)
   
4(f)
   
154,980
 
Income taxes receivable
   
29,996
   
   
11,188
   
20,784
   
4(d)
   
61,968
 
Total current assets
 
$
2,169,067
 
$
1,595,761
 
$
 
$
(534,815)
       
$
3,230,013
 
Other Assets:
                                     
Property, plant and equipment, net
 
$
165,582
 
$
192,462
 
$
 
$
       
$
358,044
 
Goodwill
   
927,738
   
1,690,464
   
   
6,267,686
   
4(c)
   
8,885,888
 
Operating right-of-use assets
   
74,801
   
170,091
   
   
         
244,892
 
Other non-current assets
   
21,309
   
52,797
   
(15,696)
   
(2,502)
   
3(a)
   
55,908
 
Non-current income taxes receivable
   
12,055
   
   
1,747
   
         
13,802
 
Non-current deferred tax asset
   
12,552
   
   
13,949
   
3,774
   
3(a), 4(f)
   
30,275
 
Equity method investments
   
4,260
   
   
   
         
4,260
 
Investments in equity-long term
   
18,614
   
   
   
         
18,614
 
Intangible assets
   
60,598
   
581,170
   
   
5,011,830
   
4(c)
   
5,653,598
 
Total Assets
 
$
3,466,576
 
$
4,282,745
 
$
 
$
10,745,973
       
$
18,495,294
 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                     
Current Liabilities:
                                     
Accounts payable
 
$
48,103
 
$
46,478
 
$
 
$
       
$
94,581
 
Unearned revenue
   
610,477
   
   
732,641
   
(15,000)
   
4(e)
   
1,328,118
 
Accrued expenses and other current liabilities
   
   
388,361
   
(388,361)
   
         
 
Other liabilities
   
404,988
   
   
412,452
   
123,771
   
3(a), 4(d), 4(f)
   
941,211
 
Income taxes payable
   
16,666
   
   
14,680
   
         
31,346
 
Current portion of operating lease liabilities
   
   
38,771
   
(38,771)
   
         
 
Advanced billings
   
   
732,641
   
(732,641)
   
         
 
Current portion of borrowings under credit facilities
   
   
91,300
   
   
6,200,140
   
3(a), 4(f)
   
6,291,440
 
Current portion of long-term debt
   
   
25,000
   
   
(25,000)
   
3(a)
   
 
Total current liabilities
 
$
1,080,234
 
$
1,322,551
 
$
 
$
6,283,911
       
$
8,686,696
 


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AT MARCH 31, 2021 (continued)

March 31, 2021
 
ICON Historical
 
PRA Historical
 
Reclassifications (See Section 4a)
 
Transaction Adjustments (See Section 3 & 4)
 
Notes
 
Pro Forma Surviving Corporation
 
   
(in thousands)
 
Other Liabilities:
                         
Non-current bank credit lines and loan facilities
 
$
348,592
 
$
1,152,663
 
$
 
$
(1,501,255)
   
3(a), 4(f)
 
$
 
Non-current operating lease liabilities
   
52,182
   
150,551
   
   
         
202,733
 
Non-current other liabilities
   
26,279
   
52,134
   
(4,253)
   
         
74,160
 
Non-current government grants
   
795
   
   
1,039
   
         
1,834
 
Non-current income taxes payable
   
14,466
   
   
3,214
   
         
17,680
 
Non-current deferred tax liability
   
9,857
   
48,324
   
   
1,276,004
   
4(c), 4(e), 4(h)
   
1,334,185
 
Total Liabilities
 
$
1,532,405
 
$
2,726,223
 
$
 
$
6,058,660
       
$
10,317,288
 
                                       
Shareholders' Equity:
                                     
Share Capital
 
$
4,585
 
$
648
 
$
 
$
1,303
   
3(b), 4(i)
 
$
6,536
 
Additional paid-in capital
   
623,409
   
1,174,096
   
   
5,213,329
   
3(b), 4(i)
   
7,010,834
 
Other undenominated capital
   
1,134
   
   
   
         
1,134
 
Accumulated other comprehensive loss
   
(54,974)
   
(115,487)
   
   
116,321
   
4(i), 4(f)
   
(54,140
)
Retained earnings
   
1,360,017
   
497,265
   
   
(643,640)
   
4(i), 4(d), 4(f)
   
1,213,642
 
Total Shareholders’ Equity
 
$
1,934,171
 
$
1,556,522
 
$
 
$
4,687,313
       
$
8,178,006
 
Total Liabilities and Shareholders’ Equity
 
$
3,466,576
 
$
4,282,745
 
$
 
$
10,745,973
       
$
18,495,294
 


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIOD MARCH 31, 2021

March 31, 2021
 
ICON Historical
 
PRA Historical
 
Reclassifications (See Section 4a)
 
Transaction Adjustments (See Section 3 & 4)
   
Notes
 
Pro Forma Surviving Corporation
 
   
(in thousands, except per share data)
 
Revenue
 
$
858,198
 
$
933,775
 
$
 
$
(76)

   
4(b)

$
1,791,897
 
                                         
  Costs and expenses:
                                       
Direct costs
   
626,244
   
472,010
   
223,352
   
(350)

   
4(b), 4(h)
   
1,321,256
 
Reimbursable expenses
   
   
223,352
   
(223,352)
   
           
 
Selling, general and administrative
   
98,535
   
122,778
   
1,219
   
(906)

   
4(h)
   
221,626
 
Depreciation and amortization
   
17,405
   
32,568
   
   
92,530
     
4(c)
   
142,503
 
Restructuring
   
   
   
   
           
 
Transaction-related costs
   
   
13,436
   
(13,436)
   
           
 
Loss on disposal of fixed assets
   
   
123
   
(123)
   
           
 
Total costs and expenses
 
$
742,184
 
$
864,267
 
$
(12,340)
 
$
91,274
         
$
1,685,385
 
Income/(loss) from operations
 
$
116,014
 
$
69,508
 
$
12,340
 
$
(91,350)

       
$
106,512
 
Interest income
   
257
   
   
   
           
257
 
Interest expense
   
(2,727)
   
(5,212)
   
   
(56,990)

   
4(f)
   
(64,929
)
Foreign currency gain/losses net
   
   
12,388
   
(12,388)
   
           
 
Other (expense) income, net
   
   
(48)
   
48
   
           
 
Income/(loss) before income taxes expense
 
$
113,544
 
$
76,636
 
$
 
$
(148,340)

       
$
41,840
 
Income tax (expense)/credit
   
(16,148)
   
(19,696)
   
   
34,754
     
4(g)
   
(1,090
)
Income before share of earnings from equity method investments
 
$
97,396
 
$
56,940
 
$
 
$
(113,586)

       
$
40,750
 
Share of equity method investments
   
(274)
   
   
   
           
(274
)
Net Income/(loss)
 
$
97,122
 
$
56,940
 
$
 
$
(113,586)

       
$
40,476
 
Net income attributable to noncontrolling interest
   
   
   
   
           
 
Net income/(loss)
 
$
97,122
 
$
56,940
 
$
 
$
(113,586)

       
$
40,476
 
                                         
Net income/(loss) per Ordinary Share
                                       
Basic
   $
1.84
                       
4(j)
 
$
0.51
 
Diluted
   $
1.82
                       
4(j)
 
$
0.50
 
                                         
Weighted average number of ordinary shares outstanding:
                                       
Basic
   
52,811,460
                       
4(j)
   
79,272,098
 
Diluted
   
53,310,453
                       
4(j)
   
80,605,578
 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020

December 31, 2020
 
ICON Historical
   
PRA Historical
   
Reclassifications (See Section 4a)
   
Transaction Adjustments (See Section 3 & 4)
   
Notes
   
Pro Forma Surviving Corporation
 
   
(in thousands, except per share data)
 
Revenue
 
$
2,797,288
   
$
3,183,365
   
$
   
$
(15,666
)
   
4(b), 4(e)

$

5,964,987
 
                                                 
  Costs and expenses:
                                               
Direct costs
   
1,979,883
     
1,649,001
     
665,761
     
32,035
     
4(b) ,4(h)

   
4,326,680
 
Reimbursable expenses
   
     
665,761
     
(665,761
)
   
     
     
 
Selling, general and administrative
   
341,690
     
453,032
     
(18,648
)
   
260,372
     
4(d), 4(h)

   
1,036,446
 
Depreciation and amortization
   
66,126
     
131,630
     
     
365,419
     
4(c)

   
563,175
 
Restructuring
   
18,089
     
     
     
     
      18,089
 
Transaction-related costs
   
     
(44,465
)
   
44,465
     
     
4(k)

   
 
Loss on disposal of fixed assets
   
     
317
     
(317
)
   
     
       —  
Total costs and expenses
 
$
2,405,788
   
$
2,855,276
   
$
25,500
   
$
657,826
 


  $
 
5,944,390
 
                                 

           
Income/(loss) from operations
 
$
391,500
   
$
328,089
   
$
(25,500
)
 
$
(673,492
)



  $
 
20,597
 
Interest income
   
2,724
     
     
324
     
     

     
3,048
 
Interest expense
   
(13,019
)
   
(43,130
)
   
(774
)
   
(251,606
)
   
4(f)

   
(308,529
)
Loss on modification or extinguishment of debt
   
     
(450
)
   
450
     
     

     
 
Foreign currency gain/
losses, net
   
     
(25,499
)
   
25,499
     
     

       
 
Other (expense) income, net
   
     
(1
)
   
1
     
     

     
 
Income/(loss) before income taxes expense
 
$
381,205
   
$
259,009
   
$
   
$
(925,098
)
 



$  
(284,884
)
Income tax (expense)/credit
   
(47,875
)
   
(61,966
)
   
     
178,682
     
4(g)

   
68,841
 
Income before share of earnings from equity method investments
 
$
333,330
   
$
197,043
   
$
   
$
(746,416
)
 


$
 
(216,043
)
Share of equity method investments
   
(366
)
   
     
     
   


$
 
(366
)
Net Income/(loss)
 
$
332,964
   
$
197,043
   
$
   
$
(746,416
)
 


$
 
(216,409
)
Net income attributable to noncontrolling interest
   
(633
)
   
     
     
   


   
(633
)
Net income/(loss)
 
$
332,331
   
$
197,043
   
$
   
$
(746,416
)
 


$
 
(217,042
)
                                                 
Net income/(loss) per Ordinary Share:
                                               
Basic
  $
6.20
     





           
4(j)
 
$
 
(2.80
)
Diluted
  $
6.15
     





           
4(j)
 
$
 
(2.80
)
             





                       
Weighted average number of ordinary shares outstanding:
           





                       
Basic
   
52,859,911
     






           
4(j)
 
   
78,992,611
 
Diluted
   
53,283,585
     






           
4(j)
 
   
78,992,611
 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2020

March 31, 2020
 
ICON Historical
   
PRA Historical
   
Reclassifications (See Section 4a)
   
Transaction Adjustments (See Section 3 & 4)
   
Notes
   
Pro Forma Surviving Corporation
 
   
(in thousands, except per share data)
 
Revenue
 
$
715,102
   
$
783,708
   
$
   
$
(7,751
)
   
4(b), 4(e)

 $

1,491,059
 
                                                 
  Costs and expenses:
                                               
Direct costs
   
505,293
     
403,862
     
176,841
     
17,431
     
4(b), 4(h)

   
1,103,427
 
Reimbursable expenses
   
     
176,841
     
(176,841
)
   
     
       
Selling, general and administrative
   
87,196
     
106,957
     
(7,248
)
   
197,778
     
4(d), 4(h)

   
384,683
 
Depreciation and amortization
   
16,322
     
32,278
     
     
91,330
     
4(c)

   
139,930
 
Restructuring
   
     
     
     
     

     
Transaction-related costs
   
     
609
     
(609
)
   
     

     —  
Loss on disposal of fixed assets
   
     
(19
)
   
19
     
     


     —  
Total costs and expenses
 
$
608,811
   
$
720,528
   
$
(7,838
)
 
$
306,539
 



   
1,628,040
 
                                 



       
Income/(loss) from operations
 
$
106,291
   
$
63,180
   
$
7,838
   
$
(314,290
)




 $  
(136,981
)
Interest income
   
1,809
     
     
     
     

     
1,809
 
Interest expense
   
(3,181
)
   
(13,487
)
   
     
(67,061
)
   
4(f)

   
(83,729
)
Loss on modification or extinguishment of debt
   
     
     
     
     

     
Foreign currency gain/losses, net
   
     
7,842
     
(7,842
)
   
     

     —  
Other (expense) income, net
   
     
(4
)
   
4
     
     

     —  
Income/(loss) before income taxes expense
 
$
104,919
   
$
57,531
   
$
   
$
(381,351
)
 



   
(218,901
)
Income tax (expense)/credit
   
(12,590
)
   
(16,871
)
   
     
59,737
     
4(g)

   
30,276
 
Income before share of earnings from equity method investments
 
$
92,329
   
$
40,660
   
$
   
$
(321,614
)
 


   
(188,625
)
Share of equity method investments
   
     
     
     
   


     —  
Net Income/(loss)
 
$
92,329
   
$
40,660
   
$
   
$
(321,614
)
 


   
(188,625
)
Net income attributable to noncontrolling interest
   
(633
)
   
     
     
   


   
(633
)
Net income/(loss)
 
$
91,696
   
$
40,660
   
$
   
$
(321,614
)
 


   
(189,258
)
                                                 
Net income/(loss) per Ordinary Share:
                                               
Basic
  $
1.63
     





           
4(j)
 
$
 
(2.44
)
Diluted
  $
1.62
     





           
4(j)
 
$
 
(2.44
)
             





                       
Weighted average number of ordinary shares outstanding:
           



                           
Basic
   
53,348,355
     




             
4(j
)
   
79,308,218
 
Diluted
   
53,905,022
     




             
4(j
)
   
79,308,218
 

Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Description of Merger

On February 24, 2021, ICON entered into a merger agreement with PRA, US HoldCo, and Merger Subsidiary. Upon the terms and subject to the conditions of the Merger Agreement, Merger Subsidiary will merge with and into PRA, with PRA surviving as a subsidiary of ICON and US HoldCo.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of PRA issued and outstanding immediately prior to the Effective Time (other than any Cancelled Shares, any Dissenting Shares and any Subsidiary-Held Shares), will be converted into the right to receive (i) from ICON, 0.4125 of one ordinary share of ICON (the “Share Consideration”) and (ii) from US HoldCo and the Surviving Corporation, $80.00 in cash, without any interest thereon (the "Cash Consideration").

On February 24, 2021, ICON also entered into a debt commitment letter (the "Commitment Letter") to provide for  commitments of up to $6.06 billion of bridge loans (the "Bridge Facility") from certain financial institutions (the "Commitment Parties") for the purposes of funding a portion of the consideration for the Merger, repaying the Existing ICON Indebtedness and the Existing PRA Indebtedness and paying all or a portion of the transaction costs.

Further, all of PRA’s outstanding share-based compensation will be replaced with similar ICON awards as described in note 4h. Share based compensation.

2. Basis of Presentation

The unaudited pro forma financial information was prepared by accounting for the Merger using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” which is referred to as ASC 805, and is derived from the audited historical financial statements of ICON and PRA.

The unaudited pro forma financial information has been prepared by ICON in accordance with SEC Regulation S-X Article 11. The unaudited pro forma financial information is not necessarily indicative of what ICON’s consolidated statements of operations or consolidated balance sheet would have been had the Merger been completed as of the dates indicated or will be for any future periods. The unaudited pro forma financial statements do not purport to project the future financial position or results of operations of ICON following the completion of the Merger. The unaudited pro forma financial information reflects transaction adjustments management believes are necessary to present fairly ICON’s pro forma results of operations and financial position following the closing of the Merger as of and for the periods indicated. The transaction adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report ICON’s financial condition and results of operations as if the Merger was completed.

The acquisition method of accounting uses the fair value concepts defined in ASC 820, “Fair Value Measurements and Disclosures,” which is referred to as ASC 820. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective and can involve a high degree of estimation.

The determination of the fair value of the identifiable assets of PRA and the allocation of the estimated consideration to these identifiable assets and liabilities is preliminary and is pending finalization of various estimates, inputs and analyses. Since this unaudited pro forma financial information has been prepared based on preliminary estimates of consideration and fair values attributable to the Merger, the actual amounts eventually recorded for the purchase accounting, including the identifiable intangibles and goodwill, may differ materially from the information presented.

The initial allocation of the preliminary estimated equity portion of the consideration for the Merger in this unaudited pro forma financial information is based upon the estimated value of such equity consideration as of May 31, 2021.

At this preliminary stage, the estimated identifiable finite lived intangible assets include customer relationships, order backlog, tradenames, database and technology assets. Goodwill represents the excess of the estimated purchase price over the estimated fair value of PRA’s identifiable assets and liabilities, including the fair value of the estimated identifiable finite assets  described above. Goodwill will not be amortized but will be subject to periodic impairment testing. The goodwill balance shown in the unaudited pro forma financial information is preliminary and subject to change as a result of the same factors affecting both the estimated consideration and the estimated fair value of identifiable assets and liabilities acquired. The goodwill balance represents the combined company’s expectations of the strategic opportunities available to it as a result of the Merger, as well as other synergies that will be derived from the Merger.

Upon consummation of the Merger and the completion of a formal valuation study, the estimated fair value of the employee equity awards replaced, and fair value of the acquired assets and liabilities will be updated, including the estimated fair value and useful lives of the identifiable intangible assets and allocation of the excess purchase price, if any, to goodwill. The calculation of goodwill and other identifiable intangible assets could be materially impacted by changing fair value measurements caused by the volatility in the current market environment. Under ASC 805, transaction costs related to the Merger are expensed in the period they are incurred. Total transaction related costs incurred by ICON and PRA in connection with the Merger are estimated to be approximately $137.0 million. To the extent that they are not already paid, the transaction costs incurred by ICON and PRA  are reflected as a liability in the Unaudited Pro Forma Condensed Combined Balance Sheet. In the three month period ended March 31, 2021, ICON incurred transaction costs of $12.9 million and PRA incurred transaction costs of $13.4 million. The remaining amount is reflected as an expense in the Unaudited Condensed Combined Statement of Operations for the year ended December 31, 2020. These costs are non-recurring.

The unaudited pro forma financial information does not reflect the following items:

the impact of any potential revenues, benefits or synergies that may be achievable in connection with the Merger or related costs that may be required to achieve such revenues, benefits or synergies;
changes in cost structure or any restructuring activities as such changes, if any, have yet to be determined;
expenses related to those employees and executives who may not be retained in the same roles after the Merger, where such agreements have not been reached at the date of this offering memorandum. These expenses may include both cash and equity payments, and which amounts could be substantial. These amounts will be reflected once agreements are reached with those employees or executives; and
any expenses related to equity awards with triggers that accelerate vesting upon termination of the relevant employee where contractual arrangements for termination with said employees have not been reached at May 31, 2021. Such expenses may be incurred in future periods and could be material.

3. Preliminary Purchase Consideration

The fair value of the Merger consideration, or the purchase price, in the unaudited pro forma financial information is estimated to be approximately $12.8 billion. This amount was derived based on the 64.77 million shares of PRA common stock (other than Cancelled Shares, Dissenting Shares and Subsidiary-Held Shares) outstanding on March 31, 2021, the cash consideration of $80.00 per share, the exchange ratio and a per share price of $223.76, which represents the closing price of ICON ordinary shares on May 31, 2021. The actual number of shares of ICON ordinary shares issued to PRA stockholders upon closing of the Merger will be based on the actual number of shares of PRA common stock outstanding when the Merger closes, and the valuation of those shares will be based on the per share price of ICON ordinary shares at that time. PRA equity awards outstanding whether or not vested or exercisable will be converted into ICON equity awards after giving effect to the exchange ratio. The terms of these awards, including vesting provisions, will be consistent to those of the historical PRA equity awards. The fair value of PRA equity awards attributable to pre-combination service that will be assumed by ICON upon completion of the Merger will be considered part of the purchase price. Accordingly, the purchase price includes estimated fair values for PRA equity awards of $411.5 million.

On the date of consummation of the Merger (the "Merger Date"), the Existing PRA Indebtedness shall be repaid in connection with the Merger. For purposes of the unaudited pro forma condensed combined balance sheet, based on the amounts of Existing PRA Indebtedness reflected as outstanding on the PRA balance sheet as of March 31, 2021, which is assumed to be the Merger Date for the Unaudited Pro Forma Condensed Combined Balance Sheet, a total of $1,273.9 million was estimated to be repaid, comprising short-term debt of $116.3 million, accrued interest of $1.4 million and long-term debt of $1,156.3 million. Amounts outstanding under the various Existing PRA Indebtedness could change between the date of the PRA balance sheet as of March 31, 2021 used for purposes of these unaudited pro forma condensed combined financial information and the Merger date. Accordingly, the amount of Existing PRA Indebtedness actually repaid on the Merger Date could be different from the amount estimated to be repaid as of March 31, 2021.

The estimated preliminary purchase price is calculated as follows:

Outstanding shares of PRA common stock as at March 31, 2021 (shares in millions)
   
64.77
 
Exchange ratio
   
0.4125
 
Shares of ICON to be issued (shares in millions)
   
26.72
 
Price per share as of May 31, 2021
 
$
223.76
 
Fair value of ICON ordinary shares to be issued ($'millions)
 
$
5,977.9
 
Fair value of PRA equity awards exchanged for ICON equity awards ($'millions)
 
$
411.5
 
Total equity consideration (including exchange of equity awards) ($'millions)
 
$
6,389.4
 
         
Cash consideration to PRA stockholders ($'millions)
 
$
5,181.2
 
Estimated repayment of PRA’s debt as of March 31, 2021 ($'millions)
 
$
1,273.9
 
Total cash consideration (including debt repayment) ($'millions)
 
$
6,455.1
 
         
Merger consideration ($'millions)
 
$
12,844.5
 

An increase of 10% in the price of ICON ordinary shares would result in a $629.3 million increase in the estimated value of the consideration, and correspondingly, in the estimated value of goodwill. A decrease of 10% in the price of ICON ordinary shares would result in a $629.3 million decrease in the estimated value of the consideration, and correspondingly, in the estimated value of goodwill.

3a. Cash consideration

The cash consideration to acquire PRA is estimated at $6,455.1 million. This represents the cash element of the total purchase price being $80.00 per share based on 64.77 million shares of PRA common stock (other than Cancelled Shares, Dissenting Shares and Subsidiary-Held Shares) outstanding on March 31, 2021 and the estimated costs of $1,273.9 million associated with the repayment of PRA’s debt (as adjusted for deferred financing fees and accrued interest) as of March 31, 2021. The repayment of the Existing PRA Indebtedness also resulted in; (i) the unwinding of deferred financing fees of $2.5 million relating to the revolving credit facility, (ii) the unwinding deferred financing fees of $3.6 million relating to the term loan, (iii) the recording of deferred tax associated with the unwinding of deferred financing fees of $1.6 million and (iv) settlement of accrued interest of $1.4 million.

3b. Equity consideration

The equity consideration to acquire PRA is estimated at $6,389.4 million. This represents the share based element of the total purchase price based on 64.77 million shares of PRA common stock (other than Cancelled Shares, Dissenting Shares and Subsidiary-Held Shares) outstanding on March 31, 2021, the exchange ratio of 0.4125 and a per share price of $223.76, which represents the closing price of ICON ordinary shares on May 31, 2021. The share consideration also includes the estimated fair value of PRA equity awards at March 31, 2021 exchanged for ICON equity awards of $411.5 million.

Preliminary allocation of the purchase price

The following table presents the preliminary allocation of the purchase price to the assets to be acquired and liabilities to be assumed in the Merger:

Assets acquired:
 
$'000
 
Cash and cash equivalents
 
$
690,259
 
Accounts receivable and unbilled services, net
   
779,346
 
Other current assets and receivables
   
126,156
 
Property and equipment
   
192,462
 
Operating lease right-of-use assets
   
170,091
 
Goodwill
   
7,958,150
 
Other identifiable intangibles
   
5,593,000
 
Other non-current assets
   
51,878
 
Liabilities assumed
       
Accounts payable
   
(46,478
)
Other liabilities
   
(425,734
)
Unearned revenue
   
(717,641
)
Non-current operating lease liabilities
   
(150,551
)
Non-current other liabilities
   
(52,134
)
Non-current deferred tax liability
   
(1,324,328
)
Net assets acquired
 
$
12,844,476
 

Upon completion of the fair value assessment following the Merger, ICON anticipates the finalized fair values of the net assets acquired will differ from the preliminary assessment outlined above. Generally, changes to the initial estimates of the fair value of the assets acquired and liabilities assumed within a one year measurement period from the acquisition date will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill, which could be material.

With the exception of the fair value adjustments detailed in Note 4. Merger-related Transaction Adjustments, the fair value of assets acquired and liabilities assumed is deemed to equal PRA’s historical carrying value due to either the liquid nature or short duration of the asset or liability, or based upon overall immateriality to the purchase price allocation.

4.  Merger-related Transaction Adjustments

The unaudited pro forma financial information reflects the following adjustments related to the Merger:

Pro Forma Unaudited Condensed Combined Balance Sheet as of March 31, 2021
 
    PPA     Notes     Financing
    Notes     Other     Notes    
Total Transaction
Adjustments
 
ASSETS
 
(in thousands)
 
Current Assets:
                                         
Cash and cash equivalents
 
$
(6,455,100
)
   
3(
a)
 
 $
5,919,909
   

4(f)
 
   $

 

   
$
(535,191
)
Available for sale investments
   
     
       —      

     
   

     
 
Accounts receivable, net
   
     

       —      

     
             
 
Unbilled revenue
   
     

       —      

     
             
 
Accounts receivable and unbilled services, net
   
     

       —      

     
             
 
Other receivables
   
     

           

     
             
 
Prepayments and other current assets
   
     


    (20,408 )
   
4(f)

   
     


  (20,408)

Income taxes receivable
   
     

           

     
20,784

    4(d)

  20,784
 
Total current assets
 
$
(6,455,100
)
 


     $ 5,899,501    

    $
20,784

   


 $
(534,815
)
Other Assets:
                   
                     


     
Property, plant and equipment, net
   
     

           

     
     


 
 
Goodwill
   
6,267,686
     
4(
c)
 
       

     
     



 
6,267,686
 
Operating right-of-use assets
   
     

           

     
     


 
 
Other non-current assets
   
(2,502
)
   
3(
a)
         

     
     



 
(2,502
)
Deferred financing fees
   
     

           

     
             
 
Non-current income taxes receivable
   
     

           

     
             
 
Non-current deferred tax asset
   
1,583
     
3(
a)

 
2,191
     
4(f)

   
   
     
3,774
 
Equity method investments
   
     

           

     
             
 
Investments in equity-long term
   
     

           

     
             
 
Intangible assets
   
5,011,830
     
4(
c)
   
     

     
     

     
5,011,830
 
Total Assets
 
$
4,823,497
   


     $
5,901,692
   


   
$
20,784
             $
10,745,973
 

     PPA      Notes     Financing
    Notes
    Other
    Notes
   
Total Transaction
Adjustments
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
(in thousands)
 
Current Liabilities:
                                         
Accounts payable
   
     
     
     

               —  
Unearned revenue
   
(15,000)

   
4(e)

   
     

     

        (15,000 )
Accrued expenses and other current liabilities
   
     

     
     

     
           —  
Other liabilities
   
(1,398)

   
3(a)

   
(26,661
)
   
4(f
)
   
151,830
     
4(d)

   
123,771
 
Income taxes payable
   
     

     
     

     
             
 
Current portion of operating lease liabilities
   
     

     
     

     
               —  
Advanced billings
   
     

     
     

                       —  
Current portion of borrowings under credit facilities
   
(91,300
)
   
3(a)

   
6,291,440
     
4(f
)
   
     

     
6,200,140
 
Current portion of long-term debt
   
(25,000
)
   
3(a)

   
     

     

           
(25,000
)
Total current liabilities
 
$
(132,698
)
 


   
$
6,264,779
   


     $
151,830
             $
6,283,911
 
Other Liabilities:
                                   
             
 
Non-current bank credit lines and loan facilities
   
(1,152,663
)
   
3(a)

   
(348,592
)
   
4(f
)
   
     

   
(1,501,255
)
Non-current operating lease liabilities
   
     

     
     

     
               
Non-current other liabilities
   
     

     
     

     
               —  
Non-current government grants
   
     

     
     

     
               —  
Non-current income taxes payable
   
     

     
  —
     

     
               —  
Non-current deferred tax liability
   
1,276,004
     
4(c), 4(e), 4(h)

   
     

     
             
1,276,004
 
Total Liabilities
 
$
(9,357
)
 


   
$
5,916,187
   


    $
151,830
             $
6,058,660
 
Shareholders' Equity:
   

                             
             
 
Share Capital
   
1,303
     
4(i), 3(b)

   
     

     
             
1,303
 
Additional paid-in capital
   
5,213,329
     
4(i), 3(b)

   
     

     
             
5,213,329
 
Other undenominated capital
   
     

     
     

     
               
Accumulated other comprehensive loss
   
115,487
     
4(i)

   
834
     
4(f), 4(i
)
   
     

     
116,321
 
Retained earnings
   
(497,265
)
   
4(i)

   
(15,329
)
   
4(f), 4(i
)
   
(131,046
)
   
4(d), 4(i
)
   
(643,640
)
Total Shareholders’ Equity
 
$
4,832,854
   


 
$
(14,495
)
 


     $
(131,046
)
           $
4,687,313
 
Total Liabilities and Shareholders’ Equity
 
$
4,823,497
   


  $
5,901,692

 

    $
20,784
             $
10,745,973
 
                                                         

Pro Forma Unaudited Condensed Combined Statement of Operations for the three months ended March 31, 2021
 
      PPA
      Notes
      Financing
      Notes
      Other
    Notes
   
Total Transaction
Adjustments 
 
      (in thousands)                      
 
Revenue
 
$
     
   

   


$
(76
)

4(b)

 
(76
)
     

     
   


   







   

 
  Costs and expenses:
   

     
   


   







   

 
Direct costs
   
     
   

   



(350
)

4(b), 4(h)
 
(350
)
Reimbursable expenses
   
     
     
     
   



     —  
Selling, general and administrative
   
     
     

   



(906
)

4(h)  
 
(906
)
Depreciation and amortization
   
92,530
     
4(c
)
   
     






   
92,530
 
Restructuring
   
     
     
     






   
 
Transaction-related costs
   
     
     
     






   
 
Loss on disposal of fixed assets
   
     
     
     






   
 
Total costs and expenses
 
$
92,530
   

    $

 



$
(1,256
)


   $
91,274
 
Income/ (loss) from operations
 
$
(92,530
)
 

    $

 



$
1,180




 $
(91,350
)
Interest income
   
     
   
     






   
 
Interest expense
   
     

   
(56,990
)
   
4(f
)
 



   
(56,990
)
Loss on modification or extinguishment of debt
   
     
     
     
       
         
 
Foreign currency losses, net
   
     
     
     
     
   
   
 
Other (expense)/income, net
   
     
     
     
     
         
 
Income/(loss) before income taxes expense
 
$
(92,530
)
 


 
$
(56,990
)





$
1,180
         $
(148,340
)
Income tax credit/ (expense)
   
24,058
     
4(g
)
   
10,799
     
4(g
)
   
(103
)
   
4(g)

   
34,754
 
Income/(loss) before share of earnings from equity method investments
 
$
(68,472
)




 
$
(46,191
)
 



$
1,077
            $
(113,586
)
Share of equity method investments
   
     
     
   




             
 
Net Income/(loss)
 
$
(68,472
)




 
$
(46,191
)
 



$
1,077
            $
(113,586
)
Net income/(loss) attributable to noncontrolling interest
   
     
     
   




               —  
Net income attributable to the combined company
 
$
(68,472
)
 


 
$
(46,191
)
 



$
1,077
         
$
(113,586
)

Pro Forma Unaudited Condensed Combined Statement of Operations for the year ended December 31, 2020

      PPA
      Notes
      Financing
      Notes
      Other
      Notes
   
Total Transaction
Adjustments
 
      (in thousands)                       
 
Revenue
 
$
(15,000
)
   
4(e)

   
   


  $
(666 )
 
4(b)

 $ (15,666
)
     

                   


                 
 
  Costs and expenses:
   

                   


                     
     

                   


                     
Direct costs
   
     

   
   


   
32,035
      4(b), 4(h)  
 
32,035
 
Reimbursable expenses
   
     

   
   


                 —  
Selling, general and administrative
   
     

   
450