|
Drkoop gets merger offer
|
 |
July 21, 2000: 5:26 p.m. ET
But beleaguered Web site says a deal with privately held firm not imminent
By Staff Writer Martha Slud
|
NEW YORK (CNNfn) - A privately held medical news and e-commerce company offered Friday to merge with ailing health information Web site drkoop.com, but the beleaguered health portal said an announcement of any such deal was "highly premature."
MillenniumHealth Communications Inc., a Reston, Va.-based Web company founded in May 1999, said it could offer "a new vision" for the beleaguered Austin, Texas-based health portal, which is rapidly running out of cash.
No terms of the proposed bid were disclosed. MillenniumHealth made a formal proposal in writing to drkoop.com officials Friday morning, Millennium Chairman and CEO William P. Danielczyk told CNNfn.com.
 "The bottom line is the company is in need of a face lift," Danielczyk said of drkoop.com. "I think we can give it to them."
In a written response late Friday, drkoop.com (KOOP: Research, Estimates) said it would consider the proposal "consistent with its fiduciary duties."
But, the company said, "no due diligence information has been received by drkoop.com regarding MillenniumHealth" and the parties have engaged in only one exploratory meeting prior to Friday's announcement.
"In short, drkoop.com believes that any announcement of a transaction between it and MillenniumHealth is highly premature."
Drkoop.com shares gained 9/16 -- or 55 percent -- to 1-19/32 Friday in anticipation of a possible deal. But in after-hour trading, shares slipped back about 4 percent to 1-17/32.
The company is seen to be on the verge of collapse, and disclosed earlier this week that second-quarter losses are expected to be far worse than expected. Two top executives also resigned.
The bid proposal would be structured as a merger - not an acquisition of the publicly traded drkoop.com - a move that would allow MillenniumHealth to retain drkoop.com's shares on the Nasdaq stock market, Danielczyk said. Given the tough environment for initial public offerings, the merger could represent a "shortcut" for Millennium to access the equity market, he said.
 Drkoop.com, founded by former U.S. Surgeon General C. Everett Koop, went public in June 1999 in an $88.4 million offering that received much fanfare. The firm's stock soared to as high as $45.75 per share soon afterward.
But amid widening losses and questions about its business model, shares have plummeted to as low as $1 per share.
"I think that the health care content space is a pretty limited market opportunity," said Deutsche Banc Alex. Brown analyst Conan Laughlin, who follows "e-health" companies. "There's lots of folks that are looking for health info on the Internet, but the ability to build a sustainable business model around them is just not there."
Drkoop.com warned in April that it has only enough cash on hand to keep going for a few more months. Since April 1, about 35 percent of the Web firm's staff has been laid off.
MillenniumHealth is the parent company of Health24 Media Enterprises Inc, an online medical news service, and Health Commerce Inc., an Internet marketplace for buying and selling medical equipment and supplies. 
|
|
|
|
|
 |
|
