Investor seeking HMA takeover fights to defuse 'poison pill'

Glenview Capital Management, a hedge fund angling for a change of control at Health Management Associates, is now fighting to get the hospital chain to amend its shareholder rights plan.

The rights plan, a defensive move also known as a “poison pill,” would go into effect if any shareholder attempts to acquire more than 15% of the company's shares. Glenview's current holding is right below that threshold at 14.6%.

In a stock exchange filing, Glenview and its affiliates said they “urge” HMA to either redeem the poison pill or amend it so that the threshold for triggering the poison pill is 25%.

They also said they were “evaluating whether to formulate, and ultimately may formulate, plans or proposals that would result in … changes to all or a portion of the board of directors.”

And they reiterated that they intend to “engage in communications with potential nominees” as well as “shareholders and other potential investors, potential strategic partners, financial advisors and other industry participants.”

HMA adopted the rights plan on May 24 in response to Glenview filing for antitrust approval to acquire up to 75% of the company—something the hedge fund later said it did not intend to carry out.

But speculation involving a merger has sent HMA's stock price on a tear, with Glenview's latest filing sending shares to a new high today topping $15, a 9% increase over Tuesday's closing price. The Naples, Fla.-based company was trading below $11 before news of Glenview's actions become public.

While an HMA bidder would no longer be getting the company on the cheap, analyst Darren Lehrich at Deutsche Bank said in a research note that the company could fetch as much as $20 a share in a takeover. Like many analysts, he highlighted Community Health Systems, Franklin, Tenn., as a logical suitor, citing Glenview's large stake in Community's shares and Community's “appetite for deals.”

He also noted that William Schoen, who has been chairman of HMA's board since 1986, may soon follow Gary Newsome, the company's president and CEO, in stepping down from his position.

Follow Beth Kutscher on Twitter: @MHbkutscher