Health Management Associates Inc has attracted takeover interest from Community Health Systems Inc and other rivals about buying the $4 billion hospital operator, three people familiar with the matter said on Tuesday.
Other hospital chains that have been exploring a potential deal include HCA Holdings Inc and LifePoint Hospitals Inc, some of the people said. They asked not to be named because the matter is not public.
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News of the takeover interest comes as Health Management seeks to fend off a campaign from hedge fund Glenview Capital Management, which has threatened to launch a proxy battle against the company.
Shares of Naples, Florida-based Health Management rose 4.6 percent to $16.18 on the New York Stock Exchange on Tuesday, valuing the company at around $4.2 billion.
Community Health - which several sources familiar with the matter have identified as the most likely buyer - rose 2.8 percent to $47.39, giving it a market value of nearly $4.5 billion.
Representatives for Health Management, HCA and LifePoint declined to comment. Community Health did not immediately respond to requests for comment.
Since President Barack Obama's healthcare reform was passed in 2010, there has been a wave of consolidation - more than 650 deals for hospitals, according to Thomson Reuters data - as they seek to protect themselves against increasing costs and lower reimbursement fees from the government.
On June 24, Tenet Healthcare Corp announced a deal to buy smaller rival Vanguard Health Systems Inc for $1.73 billion, putting it in a better position to benefit from the millions of Americans about to get insurance under Obama's healthcare reform.
The combined company will be the second-largest for-profit U.S. hospital operator, with total revenue of about $15 billion in 2012, behind No. 1 HCA but surpassing Community. Tenet fended off a hostile takeover effort from Community Health in 2011.
Health Management said last month it hired Morgan Stanley and law firm Weil, Gotshal & Manges in response to Glenview's campaign.
The company said on May 28 that Chief Executive Gary Newsome will retire at the end of July and its board of directors had begun a search for his replacement.
(Reporting by Soyoung Kim, Jessica Toonkel and Greg Roumeliotis in New York; Editing by Gerald E. McCormick)