HMA finds buyer, but at discounted price

NAPLES — Hospital operator Health Management Associates says it has agreed to be bought by Tennessee-based Community Health Systems for approximately $7.6 billion in cash and stock.

The deal means Naples will lose the headquarters of one of its blue-chip companies. Under the leadership of Chairman William Schoen, HMA has grown to include 71 hospitals in non-urban areas around the country. Its stock is publicly traded on the New York Stock Exchange.

The deal for $13.78 per HMA share is 8% less than the Naples-based hospital company's closing price of $14.92 on Monday. Community Health offered to pay $10.50 in cash and the remainder in the company's stock (symbol: CYH; recent price: $47.23). The boards of both companies have approved the deal, though 70% of HMA shareholders must also agree before the deal can close early next year.

HMA shareholders will own approximately 16% of the combined company if the deal is completed as planned. Glenview Capital, the hedge fund that is HMA's largest shareholder, has lobbied the company's shareholders to replace HMA's board of directors and it's not clear what its opinion is on any acquisition.

“The cash and stock consideration represents an 8.3x multiple of trailing cash flow, which is higher than the multiple paid in the most recent industry transaction, and a significant premium to what we believe would be the unaffected trading price of our shares,” says Schoen, in a statement. “Shareholders will receive immediate value in cash, as well as CHS stock that will allow them to participate in the future growth of a true industry leader.”