HLTH to merge into WebMD unit in all-stock deal

(Reuters) - Health information services provider HLTH Corp HLTH.O will merge into its subsidiary WebMD Health Corp (WBMD.O) in an all-stock deal, the companies said.

"This transaction will eliminate the inefficiencies associated with having two separate public companies and HLTH stockholders will receive a direct ownership in WebMD through a tax-free transaction," the companies said.

WebMD, which will be the surviving company in the merger, will be well positioned to deliver strong growth in the years ahead, the companies said.

As part of the deal, WebMD Class B shares will be retired and each outstanding share of HLTH common stock will convert into 0.4444 shares of WebMD Class A common stock, the companies said.

HLTH currently owns 48.1 million shares of WebMD Class B common stock, representing about 80 percent of equity of WebMD, which operates the popular healthcare website of the same name.

The deal will eliminate both HLTH's controlling interest in WebMD and WebMD's existing dual-class stock structure, the companies said in a statement.

HLTH currently has 102.8 million common shares outstanding.

HLTH and WebMD currently have in excess of $800 million in cash and investments and no long-term debt other than HLTH's convertible notes.

As part of the merger, WebMD will assume the obligations of HLTH's convertible notes, the companies said.

In October last year, HLTH terminated a deal to merge into WebMD, citing the debt load that the new company would be saddled with in a deteriorating credit market.

HLTH will continue the sales process of its Porex unit, which is currently reflected as discontinued operations in HLTH's financial statements, the companies said.

(Reporting by Shailesh Kuber in Bangalore; Editing by Deepak Kannan)