HLTH Corporation (NASDAQ: HLTH) is merging back its 84% owned subsidiary, WebMD Health Corp. (NASDAQ: WBMD). The company announced this morning after earnings that the two have entered into a definitive merger agreement where HLTH will merge into WebMD.
In the merger, each outstanding share of HLTH common stock will be converted into 0.1979 shares of WebMD common stock AND $6.89 in cash. This is subject to an adjustment, and you'll want to see that in the release.
The shares of WebMD Class A Common Stock currently outstanding will remain outstanding and will be unchanged in the merger. The merger will eliminate both the controlling class of WebMD stock held by HLTH and WebMD's existing dual-class stock structure.
Based on yesterday's closing prices, HLTH shareholders will receive a 26% premium at the close before any share price adjustments for their shares and direct ownership in WebMD.
There is a development outside of this merger, and that is a partial divestiture. HLTH said that it has received significant interest from potential strategic buyers for both ViPS and Porex, and it will be moving rapidly to obtain formal offers for these businesses from potential buyers. These units will be divested, although the merger is not dependent upon this. As far as adjustments, you will want to read that formal release because there are some interest bearing notes that could be issued to holders with an 11% annual rate. The company had also recently sold off a minority interest in Emdeon to General Atlantic and Hellman & Friedman.
This is not the first forray for these two. The companies used to be one, and that was before they had split up long ago. WebMD has been a public stock with its 16% float since the end of 2005. Its shares had more than doubled over that period, but shares have fallen more than 50% since October 2007. HLTH shares are down more than 20% over the same period.
These companies never needed to be broken up in the first place. This will hopefully end the confusion over which sites offer what content.
Jon Ogg is an editor and partner of 247WallSt.com.
HLTH Corp. & WebMD back together again
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