The deal would provide a financial rescue for Drkoop.com,
slashed 35 percent of its workforce since March. Like other sites, the firm has struggled to cull financing from investors despite its link with former Surgeon General C. Everett Koop.
Millennium’s letter of intent describes a stock-for-stock transaction and requests a binding no-shop agreement, a $1 million break-up fee and makes any transaction subject to material conditions, including due diligence, according to Drkoop.com.
Drkoop.com noted that its board of directors, with assistance of its financial and legal advisors, will consider the proposal consistent with its fiduciary duties. However, the company stressed that it is also considering strategic alternatives and purusing financing transactions.
Last June, Drkoop.com secured a $1.5 bridge loan from an undisclosed
merchant bank to meet short-term capital needs. The lender has since amended
the company’s credit line an additional $3 million. While this serves as a
temporary staunch to the bleeding of the company’s funds, drkoop.com said it
requires significant additional funds to meets its obligations.
MillenniumHealth, the parent of health-care news wire Health24 Media and
online medical-technology marketplace Health Commerce
Inc., said in a brief release that the deal would allow the combined company
expand its services.
“The bringing together of these two companies would offer consumers and
professionals a unique broadband communications capability, with
far-reaching and expanded services,” William Danielczyk, chairman and chief
executive, said in a statement.
DrKoop.com’s revenue for the quarter is expected to reach $2.5 million to $3
million — higher than the year-earlier period but a drop from the prior
quarter, when revenue reached $4.7 million.
Drkoop.com also said its Chief Operating Officer Dennis Upah and Chief
Financial Officer Susan Georgen-Saad have resigned. Donald Hackett, chief
executive officer, extended his employment contract for another year, and
took a 15 percent pay cut.
Earlier this week, another struggling dot-com was rescued. On Thursday,
German media giant Bertelsmann
grabbed CDNow Inc.
for $117 million in cash. The media firm infused the online music entity
with $42 million to keep its operating expenses afloat until the deal closes