Dow Jones Newswires -- July 16, 1998
HBO & Co. Shrs Dn On Continued
Post-McKesson Jitters
Dow Jones Newswires
NEW YORK -- HBO & Co.'s (HBOC) shares fell 11% Thursday in
another frenzied bout of trading spurred by confusion over why the
company's merger talks with McKesson Corp. (MCK) ended without an
agreement.
As reported Wednesday, the two sides gave sharply different versions of
what happened. HBO said its board refused to approve the transaction
because of concerns it would slow down HBO's torrid earnings growth rate
and because it opposed McKesson's demand that the replacement of the
chairman or chief executive of the new entity require a two-thirds majority of
the new board.
McKesson is maintaining that the HBO board approved the deal Monday
but that HBO later refused to proceed when the two sides couldn't agree to
new terms after HBO's stock fell 11.2% Tuesday on rumors of a deal.
McKesson also claims the two sides ran into a contract dispute regarding
two HBO executives but that the issue was considered resolvable. HBO
argues that there never was a contract dispute.
HBO Chairman and Chief Executive Charles McCall told Dow Jones
Thursday's decline in HBO's shares may have been caused by McKesson's
claim - which was widely reported by the press - that the HBO board had
approved the merger when in fact, McCall claimed, it hadn't.
HBO's Nasdaq-listed shares slipped 3 23/32, or 11%, to 30 1/32 on
volume of 26.8 million. Average daily volume is 3.6 million.
McKesson's NYSE-listed shares fell 2 1/16, or 2.4%, to 85 1/16 on
volume of 689,900. Average volume is 327,800.
- Louis Hau; 201-938-5240; louis.hau@cor.dowjones.com
Briefing Book for: HBOC | MCK
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