WebMD (NASDAQ:WBMD) today announced that it has agreed to buy back 5.5 million of its shares from Carl Icahn and certain of his affiliates, divesting Icahn of his stake in the company.

The agreed upon purchase price of $32.08 per share is what the stock closed at on Friday. The total amount of the buyback will cost WebMD $177 million, and will be funded with cash and cash equivalents on hand at WebMD.

WebMD CEO David Schlanger said in a statement that, "Our decision to repurchase these shares reflects our belief that, as the health care landscape continues to evolve, the combination of WebMD's trusted brand, industry-leading scale, high-quality consumer and professional audiences and customer relationships provides us with a strong foundation to deliver long-term growth."

It was reported in the middle of September that Icahn sold almost $40 million of his WebMD stake. As of the most recent quarter, Icahn held almost 6.7 million shares which were valued at close to $200 million, according to SEC filings.

Icahn became the biggest shareholder in WebMD in November 2011, when he paid $103.4 million to get a 9.5% stake in the company. He later boosted his stake to 13%.

Since June of this year, WebMD has bought back 10.8 million of its common shares and also almost $150 million of its debt. In total, the company will have roughly 40.4 million shares outstanding following the transaction and $550 million in cash. In addition the company will still have $54 million authorized for share repurchases. The purchase announced today was made outside of the company's existing share repurchase program.

At the time of writing WebMD's stock is up almost 10% on the news of the repurchase.

-- Material from The Associated Press was used in this report.

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