Hospital operator Health Management Associates Inc., parent company of Knoxville-based Tennova Healthcare, said Wednesday that its new board has hired independent financial advisers to evaluate the proposed sale of HMA.
Franklin, Tenn.-based Community Health Systems announced in July that it would buy HMA for $3.9 billion in stock and cash, plus assumption of debt.
The acquisition is expected to close by the end of the first quarter next year.
Hired to take a look at the offer are financial advisers, Lazard Frères & Co. LLC and UBS Securities LLC.
Naples, Fla,.-based HMA also said it has retained legal counsel, Paul, Weiss, Rifkind, Wharton & Garrison LLP and financial operating and compliance consultant Alvarez & Marsal Healthcare Industry Group LLC.
HMA also said in a news release that CHS “consented to the engagement” of the financial advisers.
Last month, HMA’s largest shareholder, Glenview Capital Management, spearheaded a shareholder vote to replace the HMA board with a slate of independent nominees tasked with getting a better price.
Glenview, a private investment management firm with more than $6 billion of assets under management, owns about 15 percent of HMA’s shares.
Brian Tanquilut, an analyst at Jefferies & Co. in Nashville, told Bloomberg News, investors should view the hiring of financial advisers to look at the deal should as good news.
“From an investor perspective, having a time line actually helps in evaluating the risk of where the stock will trade.”
Click here for the Bloomberg report.
With a new board voted in by Health Management Associates shareholders and a competitor ready to buy the company, HMA executives have been busy selling their shares in the Florida-based hospital operator.
HMA is the parent company of Knoxville-based Tennova Healthcare, which runs six hospitals in the Knoxville region.
Chief Financial Officer Kelley E. Curry, Senior Vice President-Finance Robert E. Farnham, and Senior Vice President and Controller Gary S. Bryant,are among those who have sold more than $11 million worth of shares in the past several days.
Curry was the big mover, selling more than 817,000 shares for more than $9 million from Aug. 16-Aug. 26.
HMA certified on Aug. 16 a shareholder vote to install a completely new board.
Franklin, Tenn.-based Community Health Systems announced July 30 that it would buy HMA for $7.6 billion, including assumption of debt.
Click here for Marketwatch report on stock sales
Click here for HMA’s announcement of new board.
Click here for Community Health’s purchase announcement.
The battle for control of Health Management Associates, parent company of Knoxville-based Tennova Healthcare, continues to be interesting corporate theater.
After initially saying no thanks, hospital operator HMA now says it will accept all eight of the new board members nominated by its largest shareholder, hedge fund Glenview Capital Management, “as long as the hedge fund is willing to retain two or three current directors,” according to the Wall Street Journal.
The hedge fund run by investment guru Larry Robbins can even name the chairman, Naples, Fla.-based HMA said.
Glenview wasn’t impressed by the offer.
In a statement released Friday morning, Glenview trumpeted a report by corporate governance analyst Institutional Shareholder Services Inc., but mentioned nothing about the HMA offer.
The ISS report supports complete replacement of the existing HMA board.
“We appreciate that ISS is part of the broad and growing chorus of voices calling for complete change at HMA, and we believe ISS’s conclusions reflect not only HMA’s historical shortcomings but more importantly reflect the skill, sincerity, preparation and thoughtful approach of the eight nominees,” Glenview said.
Also interesting is that Glenview Capital holds major stakes in both HMA and Community Health Systems, the Franklin, Tenn.-based company that has offered to buy HMA for $3.9 billion.
Glenview is the largest HMA shareholder with a 14.6 percent stake and Glenview owns about 9.5 percent of CHS, making it the largest CHS shareholder.
Click here for The Wall Street Journal story.
Click here for HMA’s statement on the ISS report.
Community Health Systems wants to buy peer company Health Management Associates, parent company of Knoxville-based Tennova Healthcare, but getting the deal done may not be easy.
Major HMA shareholder, Glenview Capita Management, opposes the CHS offer and continues to push for an overhaul of the HMA board.
Glenview, which has a 14.6 percent stake in HMA, on Tuesday turned down HMA’s offer “to immediately add” Glenview nominees to the board, including one who would serve as chairman.
Naples, Fla.-based HMA made the offer in a statement released late Tuesday.
In a strongly worded statement released shortly after HMA’s news release, Glenview rejected what it called a “hybrid” board, saying HMA shareholders are already considering the proposal for a completely new board.
“It would be inappropriate for Glenview to take any action which would circumvent Shareholders’ rights in this consent solicitation,” Glenview said.
Franklin, Tenn.-based Community Health has offered to buy HMA for $3.9 billion, or $7.6 billion, including assumed debt.
Glenview Capital has called the CHS offer a starting point for getting greater value for HMA shareholders. How Glenview’s effort to revamp the HMA board will impact the CHS offer is uncertain. The purchase has been approved by the existing HMA board and the CHS board, but still must be approved by regulators and HMA shareholders.
Click here for the full HMA statement.
Click here for the full Glenview Capital statement.
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.
Update:Glenview Capital says it is not engaged in a hostile takeover. The company issued the following statement in response to this post:
“Glenview Capital Management has filed a consent solicitation in which they have nominated a new independent, slate of directors for the board at HMA. But they have in no way initiated steps for a hostile takeover”
Shares of Health Management Associates, parent company of Knoxville-based Tennova Healthcare, hit a 52-week high today on continued takeover talk.
By late afternoon, shares were up more than 9 percent to $16.89 with 11.3 million shares traded.
The Naples, Fla.-based company is the subject of a hostile takeover by Glenview Capital Management, which has been increasing its stake in the company.
Glenview could soon have some competition. Reuters reported today that Franklin, Tenn.-based Community Health Systems Inc. and other companies also have target HMA.
HMA officials aren’t commenting on the takeover buzz.