Healtheon Confirms WebMD Talks

After much speculation that a merger may be imminent, Healtheon Corp. confirmed Wednesday that is in in talks with WebMD Inc. about a possible tie-up. However, the company cautioned that no deal has been reached.

Wednesday’s Wall Street Journal reported the companies will merge in a $5.5 billion stock deal with backing from technology giants Intel Corp., Microsoft Corp. and Excite, which was recently acquired by @Home Networks.

Microsoft, Excite and Intel will reportedly invest about $500 million in the new company. Excite will pour in $20 million to $30 million and will sell $60 million in advertising to WebMD. Microsoft is already an investor in WebMD and is expected to up its stake by another $200 million.

The newspaper said the companies aim to construct a Web site linking doctors and patients that would serve as a launch pad for electronic commerce in the health care industry.

The Journal said Healtheon’s board had already approved the deal and WebMD’s board would vote soon, although neither company would confirm that report.

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