HTLH/WebMD Deal Terminated; Credit Crisis Blamed

HTLH Corp. (HLTH) and WebMD (WBMD) today terminated their merger agreement, in the latest casualty of the current credit crunch.

HLTH owns an 84% stake in WBMD; but WBMD was to be the surviving company. Terms of the deal had called for HLTH shares to be converted into 0.1979 shares of WBMD plus $6.89 in cash.

Martin Wygod, chairman of both companies, said in a statement that “in the current economic environment, it is important for a growth company like WebMD not to be encumbered by $650 million in long-term debt that would be coming due in 18 to 36 months.”

By terminating the deal, Wygod asserted, “HLTH and WebMD will retain financial flexibility and be in an advantageous position to pursue potential acquisition opportunities expected to be available to companies with significant cash resources in this period of financial market uncertainty.”

The companies said one factot in the termination of the deal was delays in the sale of HTLH’s Porex unit. They said the sale has been delays by one of the potential buyers haveing difficulty arranging financing due to credit market conditions. HLTH is continue to seek a buyer for Porex, buy says it “cannot provide assurance as to the timing or terms for a transaction.”



HLTH also said it plans to buy back up to 50 million shares of stock, about 27% of its shares outstanding, in a self-tender at at $9.20 a share. The company has $1.3 billion in cash and investments on hand.

HLTH this morning is down $2.13, or 23.4%, to $6.97.