Financial thoughts

HLTH Corp. said Thursday it will merge into its subsidiary WebMD Health Corp. in a cash-and-stock deal valued at about $2.31 billion.

Health-information company HLTH already owns a majority stake in WebMD, the Internet health-information provider. Late last year, Elmwood Park, N.J.-based HLTH said it would likely propose a merger in which it would become part of New York-based WebMD.

Upon completion of the merger, HLTH shareholders will own about 80% of WebMD, based on the shares currently outstanding at HLTH and WebMD.

As part of the transaction, each outstanding share of HLTH common stock will be converted into 0.1979 shares of WebMD common stock and $6.89 in cash, subject to adjustment. The total value of the deal is based on the number of HLTH’s outstanding shares as of Nov. 6.

The merger will eliminate both the controlling class of WebMD stock held by HLTH and WebMD’s existing dual-class stock structure.

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 about $700 million in cash and investments, said Martin Wygod, chairman and acting chief executive of HLTH and chairman of WebMD, in a press release.

Based on Wednesday’s closing prices, HLTH shareholders will receive a 26% premium for their shares and direct ownership in WebMD no fax payday loans.

Thursday’s announcement was a bit surprising, after HLTH said earlier this month its planned acquisition of WebMD may not occur because of a negotiation stalemate.

Meanwhile, HLTH also said Thursday it plans to spin off two health businesses: ViPS and Porex.

If either ViPS or Porex has not been sold at the time the HLTH-WebMD merger is ready to be completed, WebMD may issue up to $250 million in redeemable notes to the HLTH shareholders in lieu of a portion of the cash.

WebMD’s senior management team will continue to lead the organization under Wayne Gattinella, president and CEO.

WebMD currently operates as a separate public company and, after a transition period, does not expect to incur significant incremental recurring expenses as a result of the merger, other than certain noncash expenses.

The transaction is expected to close in the second or third quarter of 2008.

Shares of HLTH (HLTH) rose $1.58, or 15.7%, to $11.63 in premarket trading after closing at $10.05 Wednesday, and shares of WebMD (WBMD) fell $1.08, or 3.7%, to $27.90 after closing at $28.98 Wednesday. 

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