Glenview Capital Management LLC, a $7 billion hedge fund headed by Lawrence Robbins, urged Health Management Associates Inc (NYSE:HMA) to amend or remove its shareholders rights plan or “poison pill” in a filing submitted to the Securities and Exchange Commission (SEC) according to a report from Michelle Faye Cortez of Bloomberg.
The board of directors of Health Management Associates Inc (NYSE:HMA) approved the poison pill in May to prevent a large shareholder from increasing its stake in the company, which would have paved the way for a hostile takeover.
Last year was a banner year for hedge funds in general, as the industry attracted $31 billion worth of net inflows, according to data from HFM. That total included a challenging fourth quarter, in which investors pulled more than $23 billion from hedge funds. HFM reported $12 billion in inflows for the first quarter following Read More
Glenview Capital Management is the largest shareholder of Health Management Associates Inc (NYSE:HMA). The hedge fund owns approximately 38.7 million shares or an almost 14.6 percent stake in the hospital operator.
Poison Pill Plan Of Health Management
Under the poison pill plan of Health Management Associates Inc (NYSE:HMA), the trigger for a hostile takeover is 15 percent, which means if a shareholder owns a stake of 15 percent or higher, other shareholders should be protected and have the right to buy new shares at a steep discount.
According to the Health Management Associates Inc (NYSE:HMA), its board of directors implemented the shareholder rights plan after the hedge fund submitted requested that regulators approve its intention to buy as much as $2.2 billion worth of stock in May. The amount represents an almost 75 percent stake in the company at that time.
Glenview Capital responded that it had no plan to acquire the hospital operator. The hedge fund also expressed its intention to continue its private discussion with Health Management Associates Inc (NYSE:HMA) regarding its future.
Based on its recent regulatory filing, Glenview Capital is encouraging the hospital operator to eliminate the poison pill or change the trigger from 15 percent to 25 percent. Yesterday, the hedge fund stated that it is considering plans and proposals to change the board of Health Management Associates Inc (NYSE:HMA), and talk to potential nominees. It also expressed its plan to discuss the issue with management, directors, shareholders, potential investors, and financial advisers among others.
Health Management Previous Announcement:
Health Management Associates Inc (NYSE:HMA) previously announced that CEO Gary Newsome will retire effective July 31. His retirement triggered speculations that the hospital operator is a candidate for takeover.
The stock price of Health Management Associates Inc (NYSE:HMA) surged by nearly 12 percent to $15.60 per share in afternoon trading on Wednesday in New York.