Community Health Systems To Buy Health Management For About $7.6 Bln, Incl. Debt

(RTTNews) - Community Health Systems Inc. (CYH) agreed to acquire Health Management Associates, Inc. (HMA) for approximately $7.6 billion, including the assumption of approximately $3.7 billion of indebtedness.

As per the terms of the agreement, Community Health Systems will acquire all of the issued and outstanding common stock of HMA for a combination of cash and Community Health Systems stock currently valued at $13.78 per HMA share, based on Community Health Systems' closing stock price as of July 29, 2013, and consisting of $10.50 per share in cash plus 0.06942 of a share of Community Health Systems common stock for each HMA share. HMA shareholders will own approximately 16 percent of the shares of the combined company following the close of the transaction.

In addition to the cash and stock consideration, HMA shareholders would also receive one Contingent Value Right (CVR) for each HMA share they own, which could yield additional cash consideration of up to $1.00 per share, depending on the outcome of certain matters described in HMA's public filings under the "Legal Proceedings" section.

The merger agreement was unanimously approved by the Board of Directors of Community Health Systems. HMA's Board of Directors also unanimously approved the agreement and recommends that its stockholders approve the merger.

Community Health Systems said it expects the transaction to have a neutral impact on its earnings per share in the first year following the close of the transaction and also expects the transaction to be significantly accretive to earnings per share thereafter.

The transaction is expected to close by the end of the first quarter of 2014 and is subject to approval by a 70 percent vote of HMA's stockholders, antitrust clearance, receipt of other regulatory approvals, the absence of certain adverse developments, and customary closing conditions.