Speculations regarding the possible takeover of Health Management Associates Inc (NYSE:HMA) are growing since the company suddenly announced the retirement of its chief executive officer Gary Newsome, effective July 31. He is leaving the company in order to lead a religious mission in South Africa.
Glenview Capital Ignited the Speculations For Health Management
An article published by Julie Creswell and Reed Abelson of New York Times DealBook cited that Glenview Capital, the largest shareholder of Health Management Associates Inc (NYSE:HMA) with 37 million shares or 14.6 percent stake ignited the speculations in its recent move.
#MICUS: Value Managers Say Their Style Is Far From Over
Note of Chuck Bath, David Wallack, and Ramona Persaud's presentation from the 2020 Morningstar Investment Conference. Q2 2020 hedge fund letters, conferences and more Dead Again? Value Managers Say Their Style Is Far From Over For more than a decade, large value has been one of the most difficult factors to own. Moderator Linda Abu Read More
In a recent regulatory filing with the Securities and Exchange Commission (SEC), Glenview Capital urged Health Management Associates Inc (NYSE:HMA) to amend or remove its shareholder rights plan or poison pill, which was adopted by the hospital operator to prevent a hostile takeover by a large investor. Under the poison pill plan, the trigger for a hostile takeover is 15 percent. If a shareholder owns a stake of 15 percent or higher, other shareholders will have the right to buy additional shares at a steep discount.
The report also cited that the largest shareholder of the Health Management Associates Inc (NYSE:HMA) showed its eagerness to play a bigger role in determining the next step of the company. Glenview Capital clarified that its plan is to continue its private discussions with the hospital operator, and it had no intention to takeover.
Health Management Seeking Help
Health Management Associates Inc (NYSE:HMA) hired financial advisers to help explore alternative strategies. Some analysts believed that hospital operators chairman William Schoen is not interested in selling the company.
Darren Lehrich, analyst at Deutsche Bank AG (NYSE:DB) (ETR:DBK) (ETR:DBK) opined, “He’s certainly someone who’s played a very strong role in forming the company’s strategy. There could be some protecting-the-legacy issues there.”
Health Management Associates Inc (NYSE:HMA) is currently under investigations and lawsuits on reports that the company intimidated doctors to admit patients to its hospitals regardless of their medical needs. The hospital operator denied the allegations.
According to other Wall Street analysts, the investigations and lawsuits against the company could turn off buyers. Vicki Bryan, analyst at Gimme Credit said, “Buying H.M.A. means dealing with its troubled operations plus escalating risks from burgeoning legal issues that could prove prohibitively expensive.”
One of the potential buyers for Health Management Associates Inc (NYSE:HMA) is Community Health because one of its executive expressed the company’s interest to make another takeover. Community Health acquired Triad Hospitals for $6.8 billion in 2007.