The HLTH Corp. and the WebMD subsidiary in which it holds a majority stake have announced a definitive deal to merge.
Under the agreement announced Thursday, HLTH, which owns an 84 percent stake in WebMD, will be merged into the New York-based company. The move is expected to provide working capital for WebMD and reduce the total number of shares of WebMD on the market.
Shareholders of HLTH common stock will be converted into 0.1979 shares of WebMD common stock and $6.89 in cash, if HLTH is able to sell two subsidiaries that it has been seeking to sell. HLTH has said it has received "significant interest" in its ViPS and Porex business lines.
The shares of WebMD class A common stock currently outstanding won't be affected by the merger, but the deal will eliminate both the controlling class of WebMD stock and WebMD's existing dual class stock structure.
Martin J. Wygod, chairman and acting CEO of HLTH and chairman of WebMD, said the deal would provide approximately a 26 percent premium for owners of HLTH common stock.
After the sale, there will be approximately 45 million shares of WebMD outstanding, compared with about 57 million today. Senior management of WebMD will continue to lead the organization.
Separately, both companies also announced financial results for the quarter ended Dec. 31, 2007. WebMD reported a 22 percent increase in revenue, to $96.6 million, while net income was $48.3 million, or 81 cents per share - partially a result of a benefit of $24.7 million, or 41 cents per share, related to tax treatments.
At HLTH, revenue for the fourth quarter totaled $145.8 million, compared with $228.9 million in the same quarter last year. Net income for the company in the fourth quarter was $43.1 million, or 20 cents per share, aided by a benefit of $23.7 million, or 10 cents per share, from specific tax treatments.