Community Health Systems Inc. and Health Management Associates Inc. announced this morning that they have entered into a definitive merger agreement in which CHS will acquire HMA for approximately $7.6 billion.
HMA, based in Florida, currently operates 71 hospitals in 15 states with approximately 11,000 licensed beds, including three for-profit hospitals in Cumberland and Lancaster counties: Carlisle Regional Medical Center, Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center. Shares of HMA are traded on the New York Stock Exchange under the ticker symbol HMA.
CHS, based in Tennessee, currently owns, leases or operates 135 hospitals in 29 states with an aggregate of approximately 20,000 licensed beds through its subsidiaries. One of them is Memorial Hospital in York, which CHS acquired last year. Shares of CHS are traded on the New York Stock Exchange under the ticker symbol CYH.
The deal includes assumption of approximately $3.7 billion of debt. When completed, CHS would own or operate approximately 206 hospitals in 29 states with a total bed count of more than 31,000.
Under the terms of the agreement, CHS will acquire all of the issued and outstanding common stock of HMA for a combination of cash and CHS stock currently valued at $13.78 per HMA share, based on CHS’s closing stock price as of July 29, 2013, and consisting of $10.50 per share in cash plus 0.06942 of a share of CHS common stock for each HMA share. HMA shareholders will own approximately 16 percent of the shares of the combined company after the close of the transaction.
In addition to the cash and stock consideration, HMA shareholders would also receive one Contingent Value Right (CVR) for each HMA share they own, which could yield additional cash consideration of up to $1 per share, depending on the outcome of certain matters described in HMA’s public filings under the “Legal Proceedings” section. The merger agreement was unanimously approved by CHS’s board of directors. HMA’s board of directors also unanimously approved the agreement and recommends that its stockholders approve the merger.
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, according to a news release.
For the past several months, HMA has been battling a takeover attempt by Glenview Capital Management LLC, which owns 14.5 percent of its outstanding common stock.
Editor’s note: This story has been modified to correct the name of one of the hospitals HMA owns.