The credit crunch's latest victim: HLTH-WebMD deal

Filed under: Deals

While there are signs of a thawing of the credit crisis, the fact remains that getting financing for deals is no easy feat. Along those lines, HTLH Corp. (NASDAQ: HLTH) and WebMD (NASDAQ: WBMD) announced this week that they are terminating their $2.31 billion merger deal.

Interestingly enough, HLTH already has an 84% stake in WebMD. In other words, HLTH had lots of leverage in the proposed transaction.

But, of course, it wasn't enough.

There is some good news, though; that is, by not having to take on debt, HLTH and WebMD will have some flexibility in buying other companies. With the recent plunge in equities, there are certainly many compelling bargains.

However, HLTH still has some issues. The company has to manage $650 million in long-term debt (WebMD, on the other hand, has $340 million in the bank and has no long-term debt). What's more, the company is having trouble with the sale of its Porex division. So, to make up for things, HLTH plans to buy back up to 50 million shares for $9.20 a piece.

Based on the news, HLTH shares fell 13% to $7.96 and WebMD's shares spiked 26% to $19.10.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Permalink | Email this | Comments