Community Health Systems Inc. announced its plans to purchase the smaller hospital chain, Health Management Associates Inc., for US$3.9 billion. The move was decided in line with Community Health's goal to improve its base amid the various reforms undergone by the country's healthcare system today.
Community Health is the second biggest for-profit U.S. hospital chain nationwide, following HCA Holdings Inc.. Health Management has established itself as an important healthcare entity in Florida and other southeast U.S. cities. The two companies' hospitals are mostly situated in rural areas and smaller cities.
The larger healthcare company agreed to pay US$13.78 per share in cash and company stock for the hospital units, said Community Health in line with Monday's share prices. The agreement would give shareholders of Health Management a 16% percent stake in the integrated company and up to US$1 per share contingent value right.
Community Health shares jumped 2.4% to 48.35 while Health Management shares dropped around 6.9% to US13.89 prior to the market opening.
The boards of both companies have approved the deal, which they expect to close by the end of March.
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