Oct. 20 (Bloomberg) -- HLTH Corp. and its subsidiary WebMD Health Corp., owner of the WebMD Web site, gave up plans to merge, citing ``uncertainty'' in financial markets and trouble finding a buyer for a second HLTH unit.

As a result, WebMD will continue to operate as a publicly traded subsidiary, 84 percent owned by HLTH, the companies said today in PR Newswire statement. WebMD, based in New York, has $340 million in cash and investments and no long-term debt, according to the statement.

WebMD would have taken on $650 million in debt due in 1 1/2 to 3 years if the agreement had been carried out, merging HLTH into WebMD, according to Martin J. Wygod, chairman of both companies. WebMD's shares rose as much as 7.8 percent, to $16.37, in Nasdaq Stock Market composite trading, after the announcement, while HLTH dropped 24 percent, the most in eight years, to $6.92.

``By terminating their merger, HLTH and WebMD will retain financial flexibility and be in an advantageous position to pursue potential acquisition opportunities expected to be available to companies with significant cash resources in this period of financial market uncertainty,'' Wygod said.

Under an agreement announced in February, HLTH was to combine with WebMD, leaving WebMD as the surviving company. HLTH was to sell two units to pay for the transaction. General Dynamics Corp., of Falls Church, Va., bought HLTH's ViPS Inc., a data-management company, for $225 million in July.

Porex Sale Delayed

A sale of Porex, HLTH's other remaining subsidiary, has been delayed ``as a result of one of the leading potential buyers having difficulty arranging financing,'' according to HLTH, of Elmwood Park, New Jersey. Porex makes plastic products used in health-care, industry and consumer products.

HLTH said it will buy back as many as 50 million shares of its common stock for $9.20 each, using some of its $1.3 billion in cash for the purchase. That $1.3 billion excludes the $340 million held by WebMD. HLTH had 184.4 million shares outstanding as of Aug. 5, according to data compiled by Bloomberg.

To contact the reporter on this story: Robert Greene in Washington at rgreene2@bloomberg.net.

Last Updated: October 20, 2008 09:54 EDT