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CHS Completes HMA Acquisition

After several months of negotiations and fine-tuning, Franklin, Tenn.-based Community Health Systems has closed on its acquisition of Health Management Associates in Naples, Fla.

CHSlogoLast July, CHS said it would buy Health Management for $3.9 billion in cash and the assumption of $3.7 billion of debt. The deal gives CHS 206 hospitals across 29 states, making it the largest for-profit hospital chain and one of the biggest hospital systems overall. CHS' net revenue for this year is expected to exceed $21 billion, putting it behind only Nashville, Tenn.-based Hospital Corporation of America.

"This transaction provides us with increased scale and broader geographic reach as we work to create strong healthcare networks across the nation," CHS Chairman and CEO Wayne Smith said in a news release. "Our larger organization is well-positioned to address the changing dynamics in our industry and dedicated to providing quality care for millions of patients and all the communities we serve. We look forward to effectively integrating this acquisition and generating significant value for our shareholders."

Health Management's website now redirects to a revamped CHS website, and it has consequently ceased trading on the New York Stock Exchange. Its shareholders, who approved the merger earlier this month, will receive $10.50 per share in cash, a small stake in CHS common stock and one contingent value right for every share of Health Management they own.

The merger still must clear one final hurdle. Last week, the Federal Trade Commission approved the deal, but it said CHS must sell two hospitals to pass antitrust scrutiny. According to the settlement with the FTC, CHS must divest 281-bed Riverview Regional Medical Center in Gadsden, Ala., and 116-bed Carolina Pines Regional Medical Center in Hartsville, S.C. The hospitals must be sold to FTC-approved buyers within six months after the government issues the order.

Many unions and healthcare advocacy groups have condemned the merger, arguing the new mega system could result in higher prices. The American Federation of Teachers has also said CHS' takeover of Health Management is a conflict of interest. Larry Robbins, founder of New York City-based hedge fund Glenview Capital Management, owns significant shares of both CHS and Health Management, and he spearheaded a campaign last year to overhaul the top management at the financially struggling Health Management.

More Articles on CHS:
FTC: CHS Must Sell 2 Hospitals to Complete HMA Deal
CHS Prepares $4.6B for HMA Merger
Registered Nurses to Voice Opposition to CHS-HMA Deal

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