NEW YORK (AP) -- Continuing turmoil in the financial markets prompted HLTH Corp. and its subsidiary WebMD Health Corp. to cancel a $2.31 billion cash-and-stock merger, the companies said Monday.
The boards of directors of both companies favored ending the deal, which was announced in February. HLTH holds an 84 percent stake in WebMD, which provides a range of health information to consumers and health care professionals.
"The boards of directors of HLTH and WebMD believe 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," said Martin J. Wygod, chairman of HLTH and WebMD, in statement.
Both HLTH and WebMD will retain financial flexibility by terminating the deal while keeping cash resources during a period of uncertainty in the market, he added.
Additionally, HLTH's difficulty in selling its Porex plastics business was counted as a factor in ending the deal. That sale has been delayed because a potential buyer has had difficulty arranging financing.
Shares of Elmwood Park, N.J.-based HLTH plummeted $2.11, or 23.2 percent, to $6.99 shortly after the opening bell. The stock earlier hit a new 52-week low of $6.88. It has ranged from $7.04 to $14.85 over the past year.
Shares of WebMD advanced $1.89, or 12.5 percent, to $17.07. The stock has traded in a 52-week range of $13.67 to $51.70.
(Copyright 2008 by The Associated Press. All Rights Reserved.)