Fusion surgery

30 July 2013 By Robert Cyran Follow @rob_cyran

HMA agreed to sell itself for $3.9 bln at an odd moment. Shareholders are set to vote on whether to oust the board, the CEO is decamping for a Mormon mission and government scrutiny of its practices is growing. The deal looks hasty and may leave money on the operating table.

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Community Health Systems on July 30 said it had agreed to acquire Health Management Associates for $3.9 billion, paying $10.50 in cash and 0.06942 of its own stock for each share of the rival hospital chain. In addition, Community Health will grant one contingent value right for each HMA share, which could yield up to $1 of additional consideration depending upon losses resulting from government litigation. To close, the deal needs the approval of 70 percent of HMA’s votes.
HMA also announced it had received additional subpoenas from the U.S. Department of Health and Human Services, Office of the Inspector General, regarding emergency room operations and physician relationships. The inspector general originally sent subpoenas to HMA in 2011. In the first quarter of this year, HMA said it had received a subpoena from the Securities and Exchange Commission on documents relating to its accounting. Community Health is also under investigation. It said earlier in June it had received subpoenas from the Department of Justice regarding its short-stay admissions policy.
Glenview Capital, which owns a 15 percent stake in HMA, launched a proxy fight against the company earlier this year. HMA Chief Executive Gary Newsome has said he plans to step down at the end of July to become a Mormon missionary.

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