HMA erects takeover defense

Health Management Associates, Naples, Fla., is taking action to prevent a takeover of the company.

The beleaguered hospital chain said today it has adopted a shareholder rights plan on the heels of an activist investor building a position in the company. A shareholder rights plan is a defensive maneuver to prevent a takeover.

Hedge fund Glenview Capital Management filed a Schedule 13D with the U.S. Securities and Exchange Commission earlier this month, disclosing a 14.56% stake in the company and noting that it may “engage in communications with relevant parties regarding the company and ways to enhance shareholder value.”

Those discussions, it said, might involve “the company's management, members of the board of directors, shareholders or other investors, potential strategic partners, financial advisers and other industry participants.”

In response, the hospital chain, which has a market capitalization of $2.86 billion, said it was adopting the rights plan to prevent a change of control at the company and “enable all stockholders to realize the long-term value of their investment in the company.”

HMA's most recent troubles began last December, when “60 Minutes” aired allegations that it pressured physicians to pad admissions. Mounting legal bills affected fourth-quarter results, and large drops in admissions and outpatient activity in the first quarter of this year led the company to lower its earnings guidance for 2013.

Last month the company also disclosed that it was under investigation from the SEC, which had subpoenaed billing and accounting data.

The company trails its larger peers HCA, Nashville; Tenet Healthcare Corp., Dallas; and Community Health Systems, Franklin, Tenn., in market capitalization. The last attempted mega-merger in the industry was Community's unsuccessful $4 billion bid in 2010 for Tenet, which ultimately thwarted the move.

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