The new board of directors at Naples, Fla.-based Health Management Associates has taken steps to evaluate and move forward with the company's pending $7.6 billion merger with Franklin, Tenn.-based Community Health Systems.
CHS and Health Management have signed an amendment and consent agreement, in which Health Management has hired two additional financial advisers — Lazard Frères & Co. and UBS Securities — to ensure the financial terms of the merger are fair.
The two firms have until Nov. 19 to render any opinions on the deal, if requested. If they find the merger is unfair and subsequently cancel the merger, Health Management would be obligated to pay CHS a termination fee of $109 million. In August, CHS executives did not provide a specific dollar amount for a potential breakup fee.
Health Management plans on holding a special meeting of shareholders to approve the merger. At least 70 percent have to vote in favor of it. Both parties expect the deal to close in the first quarter of 2014.
CHS announced its intent to acquire Health Management in July. The deal is worth $3.9 billion in cash and stock, and CHS will also assume $3.7 billion of Health Management's debt. If approved, CHS would become the largest for-profit hospital operator in the country, by number of hospitals, with 206 across 29 states.
Health Management underwent a board shakeup in August after a majority of shareholders voted to remove and replace the old board. Glenview Capital Management, a $6 billion New York City-based hedge fund and the largest shareholder of Health Management, initiated that process through a consent solicitation. Glenview executives have been critical of Health Management's performance all year.
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