NEW YORK (AP) — Health Management Associates said Wednesday that its new board of directors supports the sale of the hospital company to competitor Community Health Systems.
HMA’s board recommended that shareholders vote for the sale, saying it provides maximum value for shareholders, makes strategic sense and will make both companies stronger.
Glenview Capital Management, which is HMA’s largest shareholder, said it will vote its stock in favor of the sale.
Community Health Systems Inc. said it was pleased with the decision.
The deal values HMA at $13.78 per share, or $3.9 billion, and the companies say the cash-and-stock transaction is worth a total of $7.6 billion including HMA’s debt.
HMA stock gained 72 cents, or 5.8 percent, to $13.25 in afternoon trading. Community Health Systems shares rose 72 cents, or 1.7 percent, to $43.06.
The deal comes just as the federal health care overhaul starts adding millions of newly insured people to the health care system. At the end of the third quarter, Community Health Systems ran 135 hospitals in 29 states. Its hospitals are located in non-urban and mid-size markets. Health Management Associates Inc., based in Naples, Fla., runs 71 hospitals in 15 states, mostly in the Southeast and Texas.
Community Health Systems, which is based in Franklin, Tenn., offered to buy HMA in late June. About two weeks later, HMA shareholders agreed to replace all eight members of the company’s board. The board changes had been proposed in June — before the proposed sale was announced — by Glenview, which says it owns 14.5 percent stake in HMA.
In September, HMA said its new board would review the deal and hired new advisers and legal and financial counsel. It said Community Health Systems agreed to those moves.
The companies say the deal should close by the end of March pending approval by regulators and Health Management Associates shareholders.
Separately, HMA reported disappointing third-quarter results on Wednesday.
The company said it lost $96.6 million, or 37 cents per share, during the quarter ended Sept. 30 on costs related to the replacement of its board, severance pay, and the merger with Community Health Systems. Excluding one-time charges it lost a penny per share from continuing operations. Revenue fell 1 percent to $1.42 billion.
Analysts expected earnings of 15 cents per share on $1.45 billion in revenue, according to FactSet.