Nashville-based Community Health Systems has announced they will acquire troubled Health Management Associates (operating locally as Tennova) for approximately $7.6 billion, which includes taking on approx. $3.7 billion of HMA debt.
CHS puts the offer at $13.78 per HMA share, based on CHS' closing stock price as of July 29, 2013. HMA shareholders will receive $10.50 per share in cash plus 0.06942 of a share of CHS common stock for each HMA share. CHS shares closed at 47.23 yesterday and are up to $49 in early trading today. Shares of HMA closed at $14.92 yesterday but are down to $13.60 in early trading after posting second quarter results and the takeover announcement.
HMA shareholders will also receive one Contingent Value Right (CVR) for each HMA share, which according to CHS "could yield additional cash consideration of up to $1.00 per share, depending on the outcome of certain matters described in HMA’s public filings under the 'Legal Proceedings' section."
According to CHS, the transaction is expected to close by the end of the first quarter of 2014 and is "subject to approval by a 70 percent vote of HMA’s stockholders, antitrust clearance, receipt of other regulatory approvals, the absence of certain adverse developments, and customary closing conditions." It is not contingent on financing, which has already been lined up.
In related news, HMA released second quarter results today, and also announced "that on June 10, June 26, and July 11, 2013, Health Management received additional subpoenas from the U.S. Department of Health and Human Services, Office of the Inspector General (OIG). These subpoenas supplement subpoenas originally received in 2011 regarding certain emergency room operations. In addition, on June 12, 2013, Health Management received an additional subpoena from the OIG which supplements a 2011 subpoena regarding physician relationships."
The company also named a new interim President and CEO to replace the retiring CEO who is leaving to serve as the President of The Church of Jesus Christ of Latter-day Saints Uruguay-Montevideo Mission in South America.
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