By Lisa Kerner
Charlotte, N.C., Feb. 21 - HLTH Corp. will merge into its subsidiary, WebMD Health Corp., the companies announced on Thursday.
Under the definitive merger agreement, each outstanding share of HLTH common stock will be converted into 0.1979 share of WebMD common stock plus $6.89 in cash.
HLTH owns 84% of WebMD.
The shares of WebMD class A common stock currently outstanding will remain outstanding. In addition, the merger will eliminate the controlling class of WebMD stock held by HLTH and WebMD's existing dual-class stock structure.
HLTH shareholders will own about 80% of WebMD once the merger is complete.
"The merger is expected to reduce WebMD's share count by 20%, to eliminate HLTH's controlling interest in WebMD and to capitalize WebMD with approximately $700 million in cash and investments," Martin J. Wygod, chairman of both HLTH and WebMD, said in a company news release.
The cash portion of the merger consideration will be funded using both companies' cash and investments, as well as proceeds from HLTH's anticipated sales of its ViPS and Porex businesses.
If either ViPS or Porex has not been sold when the HLTH-WebMD is set to close, WebMD may issue up to $250 million in redeemable notes to the HLTH shareholders in lieu of a portion of the cash consideration payable in the merger.
WebMD president and chief executive officer Wayne Gattinella will continue to head the company.
The transaction is expected to close in the second or third quarter of 2008.
HLTH was advised by Raymond James and Associates, Inc. WebMD's special committee was advised by Morgan Joseph & Co.
It was previously reported that merger talks between HLTH and WebMD's special committee had stalled when the two sides failed to reach mutually acceptable terms for a merger.
Wygod was also named HLTH's acting CEO after CEO Kevin Cameron began a medical leave.
HLTH, formerly Emdeon Corp., is a health care business, technology and information services company based in Elmwood Park, N.J.
WebMD provide health information services through its online portals and publications.
| Acquirer: | WebMD Health Corp.
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| Target: | HLTH Corp.
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| Announcement date: | Feb. 21
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| Price per share: | Each share of HLTH common stock will be converted into 0.1979 shares of WebMD common stock and $6.89 in cash.
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| Expected closing: | Second or third quarter of 2008
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| Stock price of acquirer: | Nasdaq: WBMD; $28.98 on Feb. 20
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| Stock price of target: | Nasdaq: HLTH; $10.05 on Feb. 20
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