WebMD creating more buzz with possible Microsoft deal
By DON LONG
Healthcare InfoTech Managing Editor
In the scramble to become the primary medical portal on the Internet, WebMD (Atlanta) may be on the verge of leading the pack and lapping the field.
After putting together a string of big alliances since its formation last year, the biggest yet could be a link-up with software goliath Microsoft (Redmond, Washington), according to reports by the Bloomberg News Service and the Atlanta Journal-Constitution.
Bloomberg reported that Microsoft is offering to pay $300 million for a 27% share in WebMD. Analysts are saying the investment makes sense, given the large interest in medical information by Internet users (see "Surveys" story below). That interest could help to carve out a major share of the overall U.S. healthcare market, estimated at around $84 billion annually.
The news doesn’t do anything to quiet what the Southeast edition of the Wall Street Journal on Wednesday criticized as too much "buzz" about WebMD when it is in its pre-IPO "quiet period." The company filed for the IPO Jan. 28 but has yet to set a date for the offering.
Meanwhile, the company has been putting together deal after deal, and two Journal writers said that the company "has hardly muzzled itself" in advance of the offering, which is expected to raise up to $55 million. The Journal piece also cited comments by WebMD Chief Executive Jeffrey Arnold, who in interviews has said he wanted his company to be the next Amazon.com and is trying to create a "mega-medical mall." Legal authorities told the Journal that they thought WebMD "is pushing the envelope of the quiet period," while Arnold defended his comments as a matter of "just stating facts."
Spokespersons for both Microsoft and WebMD declined any comment on reports of the proposed tender offer, with WebMD staffers begging off comment because of the quiet-period rule.
Microsoft spokesman Tom Pilla said it was against his company’s policy to comment on what he termed "rumors."
If this rumor is in fact true, the Microsoft offering would top that of the $220 million investment which chemical giant DuPont (Wilmington, DE) has proposed to make in WebMD, that deal announced just last week (see Healthcare InfoTech, April 9, 1999). And the company earlier this year signed deals with Internet provider Lycos and the TV news powerhouse CNN.
Adding Microsoft to that trio would obviously give WebMD four huge name brands supporting its efforts to dominate the Internet/healthcare relationship.
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