Third Time’s The Charm
Third Time’s The Charm
June 18, 2009
HLTH Corporation and its subsidiary WebMD Health Corp. are once again attempting a merger.
After an earlier transaction agreement unraveled in February 2008, and a more recent effort fell apart in October 2008, it now looks like the two entities may finally consecrate their long-awaited union.
HLTH, which owns an 83% stake in WebMD, will merge into the health Web-site operator in an all-stock transaction. Following the $1.2 billion transaction, WebMD will be the surviving company.
Elmwood Park, New Jersey-based HLTH’s October 2008 transaction agreement with WebMD was called off due to financial market turmoil. The companies cited the burden of an anticipated $650 million debt that it would suffer if the HLTH merger were completed and escalating financial turmoil.
Following the merger, Martin J. Wygod, currently chairman of both companies, will serve as chairman of the combined entity. Wayne Gattinella, presently president and chief executive of WebMD, will hold the same positions in the combined company.
A year ago, General Dynamics Information Technology bought HLTH’s data management unit ViPS for $225 million. In February 2008, HLTH sold its 48% stake in Emdeon Business Services to private equity firms General Atlantic and Hellman & Friedman for $575 million. In November 2006, General Atlantic had acquired Emdeon's other 52% stake from HLTH.
HLTH’s attempts to sell Porex, its plastic medical products manufacturing unit, have proved unsuccessful.
In November 2008, WebMD entered into a joint advertising services agreement and bought a minority stake in Marketing Technology Solutions, a Jersey City, New Jersey-based interactive marketing company.
The New York City-based WebMD has seen increasing competition in recent years. In October 2008, Steve Case’s online health care business, Revolution Health Network, merged with Waterfront Media to create the Everyday Health Network, in a reported $300 million transaction. The deal was largely seen as an ambitious attempt to topple WebMD.
Calls placed to HLTH and WebMD were not returned by press time. HLTH stock traded at $12.76, and WebMD stock traded at $29.29 as of midday Thursday.
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