Health Management Associates Inc (NYSE:HMA) has asked its shareholders to ignore Glenview Capital’s attempt to overhaul the hospital operator’s board, reports Kristin Jones of the Wall Street Journal. The hospital operator is currently considering strategic alternatives as Glenview is gearing up to oust all the current board members. The hedge fund nominated eight candidates to the board last week.
Larry Robbins-led Glenview Capital is the largest shareholder of Health Management Associates Inc (NYSE:HMA) with about 14.6 percent stake. The hospital operator’s CEO Gary Newsome has announced to step down on July 31. The activism of Glenview has fueled expectations that Health Management Associates Inc (NYSE:HMA) may be sold.
Glenview An Unnecessary Distraction
Health Management Associates Inc (NYSE:HMA) said in a communique to shareholders that Glenview’s timing would harm shareholders’ interests. The hedge fund’s moves come about two weeks after the company started exploring strategic alternatives, and about a month after all the current Health Management Associates Inc. directors were elected by shareholders at its 2013 Annual Meeting. Health Management Associates Inc. said that the hedge fund’s actions are nothing but an unnecessary distraction to its strategic review process.
Health Management Associates Inc has hired Weil, Gotshal & Manges LLP and Morgan Stanley to review strategic alternatives, including hiring a new CEO to replace Gary Newsome. Wall Street has been speculating that Health Management Associates Inc (NYSE:HMA) may be acquired as the hospital industry faces intense pressure to consolidate under the 2010 healthcare laws.
Health Management’s Poison Pill
Glenview Capital has urged Health Management Associates Inc (NYSE:HMA) in a regulatory filing to remove its so-called poison pill or shareholder rights plan. The hospital operator adopted the plan about a month ago to prevent a hostile acquisition by a large investor. The poison pill states that if an investor owns 15 percent or higher stake in the company, other Health Management shareholders will have the right to purchase additional shares at a discounted price.
However, Glenview Capital hasn’t taken a position yet. The hedge fund said in a letter to shareholders that it is still uncertain whether changing management would be a better move or selling the business.
Health Management Associates Inc (NYSE:HMA) share surged 1.65 percent to $15.98 at 10:20 AM EDT.
