1
EXHIBIT 8.01
SMITH, ANDERSON, BLOUNT,
DORSETT, MITCHELL & JERNIGAN, L.L.P.
OFFICES MAILING ADDRESS
2500 FIRST UNION CAPITOL CENTER P.O. BOX 2611
RALEIGH, NORTH CAROLINA 27601 RALEIGH, NORTH CAROLINA
27602-2611
_______
TELEPHONE: (919) 821-1220
FACSIMILE: (919) 821-6800
____________, 1999
Quintiles Transnational Corp.
4709 Creekstone Drive
Riverbirch Building, Suite 200
Durham, North Carolina 27703
Merger Agreement Dated as of December 14, 1998 By and Among Quintiles
Transnational Corp., QTRN Acquisition Corp. and Pharmaceutical
Marketing Services Inc.
Gentlemen:
We have acted as counsel to Quintiles Transnational Corp.
("Quintiles"), a North Carolina corporation, in connection with the proposed
merger (the "Merger") of Pharmaceutical Marketing Services Inc. ("PMSI"), a
Delaware corporation, with and into QTRN Acquisition Corp., a North Carolina
corporation wholly owned by Quintiles ("Sub") pursuant to the terms of the
Merger Agreement dated as of December 14, 1998 (the "Merger Agreement") by and
among Quintiles, PMSI and Sub. This opinion is being rendered pursuant to
Section 6.02(g) of the Merger Agreement. All capitalized terms, unless otherwise
specified, have the meaning assigned to them in the Merger Agreement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Merger Agreement,
the Registration Statement and such other documents as we have deemed necessary
or appropriate in order to enable us to render the opinion expressed below. In
our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents submitted
to us as certified, conformed or photostatic copies and the authenticity of the
originals of such copies.
In rendering the opinion set forth below, we have relied, with your
permission, upon certain written factual representations of Quintiles, Sub and
PMSI dated as of the date of this letter. We have assumed that any
representation or statement made in connection with such representations that is
made "to the best of knowledge" or similarly qualified is correct without such
qualification. We have also assumed that when a person or entity making a
representation has represented that such person or entity either is not a party
to or does not have, or is not aware of, any plan or intention, understanding or
agreement as to a particular matter, there is in fact no
2
Quintiles Transnational Corp.
___________, 1999
Page 2
such plan, intention, understanding or agreement. We also have assumed that all
such written representations will be true as of the Effective Time.
In rendering our opinion, we have considered the applicable provisions
of the Code, the Treasury Regulations, pertinent judicial authorities,
interpretive rulings of the Internal Revenue Service and such other authorities
as we have considered relevant.
In order for the Merger to qualify as a reorganization, among other
requirements, the PMSI stockholders must exchange a substantial portion of the
proprietary interests in PMSI for a proprietary interest in Quintiles. The IRS
takes the position for advance ruling purposes that this "continuity of
interest" requirement is satisfied in a potential reorganization if the value of
the acquiring corporation's stock received in the reorganization by the acquired
corporation's shareholders equals or exceeds 50% of the total consideration paid
for the stock of the acquired corporation in the potential reorganization. The
courts have ruled that the continuity of interest requirement has been satisfied
where the acquiring corporation's stock received in the reorganization accounts
for as little as 38% of the total consideration paid for the stock of the
acquired corporation in the potential reorganization.
Based on the foregoing, the continuity of interest requirement will be
satisfied in the Merger if the value at the Effective Time of the Quintiles
Common Stock issued in the Merger equals or exceeds the amount of any cash and
the fair market value of any other property received by PMSI stockholders in
exchange for their PMSI Common Stock. If the value at the Effective Time of the
Quintiles Common Stock issued in the Merger is less than the amount of any cash
and the fair market value of any other property received by PMSI stockholders in
exchange for their PMSI Common Stock, the Merger will not satisfy the IRS's
advance ruling guidelines regarding continuity of interest but may still qualify
as a reorganization.
Pursuant to the Merger Agreement, the consideration paid to a PMSI
stockholder in exchange for his PMSI Common Stock will consist of, at the
election of the PMSI stockholder, solely Quintiles Common Stock or a combination
of Quintiles Common Stock and CVPs. A PMSI stockholder who elects to receive a
combination of Quintiles Common Stock and CVPs will receive half his Quintiles
Common Stock at the Closing and the remainder at the maturity of the CVPs. Such
a PMSI stockholder will have the right to receive all or a portion of the
Quintiles Common Stock the receipt of which would otherwise be deferred until
the maturity of the CVPs before such maturity but will be required, in such
event, to forfeit all or a portion of his CVPs. In addition, PMSI stockholders
will receive cash in lieu of fractional shares. You have represented that no
other amounts of cash or property will be paid to any PMSI stockholder in
exchange for PMSI Common Stock.
For purposes of our opinion, we have assumed that the fair market value
of the CVPs plus the total amount of cash paid in lieu of fractional shares will
not exceed 50% of the total value of the consideration received by PMSI
stockholders in exchange for their PMSI Common Stock. It is possible that the
IRS may consider the amount of any cash paid at the maturity of the CVPs
3
Quintiles Transnational Corp.
___________, 1999
Page 3
rather than the fair market value of the CVPs in determining whether the
continuity of interest requirement has been satisfied. For purposes of our
opinion, we have therefore also assumed that the total amount of cash paid in
lieu of fractional shares and at the maturity of the CVPs will not exceed 50% of
the total value of the consideration received by PMSI stockholders in exchange
for their PMSI Common Stock.
Provided the fair market value of the CVPs plus the total amount of
cash paid in lieu of fractional shares (and, alternatively, the total amount of
cash paid in lieu of fractional shares and at the maturity of the CVPs) does not
exceed 60% of the total value of the consideration received by PMSI stockholders
in exchange for their PMSI Common Stock, we believe that the Merger should
qualify as a reorganization but cannot give any assurances that the IRS will not
challenge the qualification of the Merger as a reorganization.
Based upon and subject to the foregoing, we are of the opinion that (i)
the Merger will constitute a tax-free reorganization under Section 368(a) of the
Code; and (ii) Quintiles, Sub and PMSI will each be a party to the
reorganization within the meaning of Section 368(b) of the Code.
Our opinion expressed in this letter is based on current law and upon
facts and assumptions as of the date of this letter. Our opinion is subject to
change in the event of a change in the applicable law, a change in the
interpretation of the applicable law by the courts or by the Internal Revenue
Service or a change in any of the facts or assumptions upon which the opinion is
based. There is no assurance that legislative, regulatory, administrative or
judicial developments may not be forthcoming which would significantly modify
the statements or opinion expressed in this letter. Any such developments may or
may not be retroactive. This opinion represents our best legal judgment but has
no binding effect or official status of any kind. As a result, no assurance can
be given that the opinion expressed in this letter will be sustained by a court
if contested. No ruling will be obtained from the Internal Revenue Service with
respect to the Merger.
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether Federal, state, local or foreign, of the
Merger or of any transactions related to the Merger or contemplated by the
Merger Agreement. This opinion is being furnished only to you in connection with
the Merger and solely for your benefit in connection therewith and may not be
used or relied upon for any other purpose and may not be circulated, quoted or
otherwise referred to for any other purpose without our express written consent.
We hereby acknowledge and consent to Quintiles's filing of this opinion as an
exhibit to the Registration Statement with the Securities and Exchange
Commission. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
SMITH, ANDERSON, BLOUNT, DORSETT,
MITCHELL & JERNIGAN, L.L.P.