DRKOOP.COM: MillenniumHealth Inc. Offers Stock-For-Stock Merger
Drkoop.com is considering a stock-for-stock merger proposal from Millennium Health Communications Inc., the Wall Street Journal reports. Drkoop.com has been plagued with problems in recent months, leading it to look into "financial and strategic options." Last April, the company disclosed that it "faced a cash crunch" and just last week, two top executives resigned (Carrns, 7/24). The company also faces a lawsuit alleging that drkoop.com Chair and former Surgeon General C. Everett Koop and other executives sold more than 400,000 company shares in February while "in possession of materially adverse non-public information" (USA Today, 7/24). Drkoop.com officials said they had one "exploratory" meeting with MillenniumHealth last week, after receiving a nonbinding letter of intent from MillenniumHealth. The letter of intent requested a binding agreement with a $1 million breakup fee, as well as other conditions such as due diligence. While drkoop.com issued a statement saying "any announcement of a transaction between it and MillenniumHealth is highly premature," drkoop CEO Donald Hackett said that he considered the offer to be "serious." He said that the "general idea" of a merger with MillenniumHealth --which owns the health news site Health24 Media Enterprises Inc. and Health Commerce Inc., a medical technology marketplace -- would be to strengthen drkoop.com's balance sheet, which would in turn boost shareholders' stock value. MillenniumHealth Chair and CEO William Danielczyk said of the proposed merger, "We think there's tremendous synergies here. They're in need of a jump- start, and we can offer that to them" (Wall Street Journal, 7/24).
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