Glenview Capital Sought Hart-Scott-Rodino Clearance To Buy More Health Management; Issues Press Release ~ market folly

Wednesday, May 29, 2013

Glenview Capital Sought Hart-Scott-Rodino Clearance To Buy More Health Management; Issues Press Release

Earlier this month, we highlighted how Larry Robbins' hedge fund firm Glenview Capital added to its Health Management Associates (HMA) stake and filed a 13D with the SEC.  Yesterday, Glenview filed an amended 13D and included a press release seeking to clarify its holdings in HMA given that they sought Hart-Scott-Rodino clearance to buy more shares.  The full press release is below:

"Statement of Clarification by Glenview Capital, 14.6% Shareholder of Health Management Associates, Inc. 

NEW YORK, NY (May 28, 2013) – Glenview Capital Management LLC, issued the following statement of clarification regarding its holdings in Health Management Associates, Inc. (NYSE: HMA):                

“Investment funds advised by our firm, Glenview Capital Management, LLC (“Glenview”), presently hold approximately 37.8 million shares of Health Management Associates, Inc. (“HMA”), or approximately 14.6% of the Company. In our thirteenth year of operation as an investment partnership, we at Glenview are proud of not only our investment track record but of our track record of dealing directly, respectfully and privately with senior management and, as appropriate, members of the Board of Directors. We have never filed a public letter to a company or its shareholders and our strong preference is to avoid doing so in the future.  

However, we feel the 8-K issued by HMA in conjunction with the Board’s decision to enact a shareholder rights plan, commonly referred to as a poison pill, may cause confusion regarding our intentions and may lead to undue volatility in the stock price. As such, we offer the following points of clarification so that fellow shareholders may have a more complete understanding of the situation prior to the resumption of trading in HMA shares:  

i) As a result of developments regarding HMA, Glenview converted its Schedule   13G filing to a 13D on May 6, 2013.  

ii) Consistent with our 13D filing, we sought clearance, under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”), as required by law in order to be in a position to acquire even one additional share of HMA.  

iii) Under HSR requirements, each investment fund within our fund family is required to make its own HSR filing.  Each fund may file to acquire up to a maximum of $141.8 million, $709.1 million or a greater amount in HMA voting shares.  Due to the size of our funds, and the proximity of their present ownership stake to the thresholds, three funds filed for the higher authorization size of up to $709.1 million and one filed for authorization of up to $141.8 million, thus adding up to $2.2 billion of stock. 

iv) Notwithstanding the simple math of adding up these maximum threshold amounts, such an investment size is both beyond our present intention and beyond our present resources available for any single position.  Such a filing was required to facilitate even a modest increase in our present holdings.  In plain English, we have no present intention or future plan to buy either $2.2 billion of stock or 75% of HMA.  

v) Finally, in HMA’s description of the adoption of the poison pill, they indicate that such a rights plan will “help promote the fair and equal treatment of all stockholders of the Corporation (not just Glenview)…”  As perhaps this statement could lead to misinterpretation, we wish to clarify that Glenview has made no proposals, either to HMA or to any of its holdings over a thirteen year period, which are to the exclusive benefit of Glenview.  On the contrary, every discussion we have engaged in, including any recommendations we have made, represent suggestions that we believe materially improve value creation for all long-term shareholders.   

It is out of respect for our fellow HMA shareholders that we have made an exception to our long-standing practice of avoiding such open written communications, and we hope that this insight helps all market participants make intelligent decisions about their own investment positions in the Company.  We look forward to continuing our discussions with HMA in private and will use the governance tools available (which for us always starts with respectful and constructive dialogue) to pursue our common objectives of long-term value creation.”

For more recent activity from this hedge fund, we also detailed how Glenview trimmed their Tenet Healthcare stake.

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