TriZetto Calls Off Merger, Will Buy IMS Unit

TriZetto Group Inc. withdrew plans for a much-criticized merger, originally valued at $8 billion, and said it instead will buy a unit of IMS Health Inc. in a stock swap valued at $255 million. TriZetto said it will exchange about 10.6 million shares for IMS subsidiary Erisco Managed Care Technologies, which sells software to managed-care companies. Meantime, TriZetto and IMS will work together under a contract in which IMS Health will use the Newport Beach company’s HealthWeb Internet services and technology to build its own online capabilities. The new arrangement comes after the original plan, a complex merger that confused investors, led to a sell-off of shares in both companies that reduced the value of the deal on the day it was announced to $4.7 billion. In two days of trading, the value had dropped 71%. Investors in both companies also said the upstart TriZetto, a new-economy Internet health services firm, didn’t fit with the industry’s old-line Westport, Conn., information-services giant.