That didn’t take long.
A day after hospital operator Health Management Associates announced a plan to sell itself to Tennessee-based Community Health Systems at least seven law firms announced they have launched “investigations” on behalf of HMA shareholders.
Naples, Fla.-based HMA is the parent company of Tennova Healthcare, which operates six hospitals in the Knoxville area.
CHS said it would buy HMA for for $7.6 billion, including assumption of $3.7 billion in debt.
The law firm announcements all use similar language — “possible breaches of fiduciary duty,” “acting in the Company’s shareholders’ best interests,” and “maximize shareholder value.”
Here’s how the New York law firm Levi & Korsinsky describes it’s investigation:
“The investigation concerns whether the Health Management Board of Directors breached their fiduciary duties to stockholders by failing to adequately shop the Company before agreeing to enter into the transaction, and whether Community Health is underpaying for Health Management, thus unlawfully harming Health Management shareholders. In particular, at least one analyst set a price target for Health Management stock at $20.00 per share, and shares of Health Management closed above the consideration price the day before the announced merger.”
The sale has been approved by the HMA and CHS boards, but still must be approved by regulators and HMA stockholders.
Meanwhile, it will be interesting to see how many legal battle plays out. More announcements of law firm investigations can be expected.
Click here for a Motley Fool take on the proposed sale.