Shares of Health Management Associates Inc. jumped Wednesday, a day after the hospital operator's largest shareholder urged it to ease a "poison pill" shareholder rights plan designed to prevent hostile takeover attempts.
THE SPARK: Glenview Capital Management LLC said Tuesday that it wants the Naples, Fla., company to either redeem the provision or raise the percentage of stock a shareholder can own without triggering it to 25 percent from 15 percent. Glenview owns more than 37 million shares or 14.6 percent of the company's total.
THE BIG PICTURE: Health Management Associates runs 71 hospitals in non-urban areas. Most of its locations are in the Southeast.
The company said last month its board adopted a shareholder rights plan that aims to thwart takeover attempts not supported by the board after Glenview indicated it may increase its ownership stake, or try to influence control of the company.
Health Management said in a filing with the Securities and Exchange Commission that the shareholder rights plan, which will last a year, will help promote "the fair and equal treatment of all stockholders," not just Glenview.
THE ANALYSIS: Glenview is raising the pressure on Health Management to evaluate strategic alternatives like a large special dividend or the sale of the company, Susquehanna Financial Group analyst Chris Rigg said in a research note. Rigg added that the company would be attractive to several publicly traded hospitals or other buyers.
"At this point, it is unclear how the process will play out, but the odds of an outright sale are clearly increasing," the analyst wrote.
SHARE ACTION: Up 8.7 percent, or $1.21, to $15.14 in midday trading. The stock rose as high as $15.52, its highest price in more than five years, earlier in the session.