Health Management Explores Options; Shares Rally

Wednesday, 12 Jun 2013 06:12 PM

 

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Health Management Associates Inc., a subject of merger speculation, said it hired advisers to consider strategic alternatives after the largest shareholder said the hospital company should ease its poison pill defenses against a hostile takeover.

Glenview Capital Management LLC urged Health Management in a U.S. regulatory filing Tuesday to cancel the poison pill or amend it to allow an investor to hold 25 percent of shares without triggering the takeover provision, an increase from the current 15 percent. Glenview Capital, based in New York, holds 37.8 million shares of the hospital operator, or 14.6 percent of shares outstanding, according to the filing.

Health Management said Wednesday that it hired Morgan Stanley and Weil, Gotshal & Manges LLP in connection with Glenview’s share purchases and the “ongoing consideration of strategic alternatives and opportunities available.” The board also formed a committee to find a replacement for Chief Executive Officer Gary Newsome, who announced May 28 that he would resign as of July 31, the Naples, Florida-based hospital operator said in a statement.

The company runs 71 rural hospitals, about a third of which are located in Florida, with about 11,100 beds. Newsome’s announcement and moves by Glenview Capital have spurred speculation Health Management may be a takeover candidate.

Health Management shares surged 11 percent, the most in almost four years, to $15.51 at the close Wednesay in New York before the advisers’ announcement. The gain was its biggest single-day increase since Aug. 3, 2009. The company has advanced 40 percent since May 24, when it announced the takeover defense.

Strategic Talks

Glenview Capital said Tuesday it's considering whether to devise plans and proposals that may change Health Management’s board. It also plans to talk with potential nominees and may reach out to management, directors, shareholders, potential investors, financial advisers and others.

Health Management said in a May 24 filing that it adopted a takeover defense because Glenview Capital had sought regulatory approval to purchase as much as $2.2 billion of stock – at the time, about a 75 percent stake. The investor responded by saying it had "no present intention or future plan" to purchase that much stock.

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