The American Federation of Teachers is using the clout it derives from $1.08 trillion in members’ pension assets to question Glenview Capital Management’s role in a proposed merger that would create the largest hospital provider.
Hedge fund manager Glenview Capital, which manages $6.9 billion, is the largest shareholder in both Community Health Systems and Health Management Associates. CHS’ acquisition of HMA is pending approval from the Federal Trade Commission and HMA shareholders, who are scheduled to vote Jan. 8.
In a letter Tuesday to the chairmen of the companies’ boards, AFT President Randi Weingarten said: “The fact that a single hedge fund, Glenview Capital, owns the largest block of shares in both CHS and HMA … raises serious questions about the (boards’) fiduciary responsibility. These apparent conflicts of interest call into question the true beneficiaries of the proposed transaction.”
Ms. Weingarten also sent her letter to the FTC and the Securities and Exchange Commission. SEC officials, who approved the merger registration in November, declined to comment on the letter or possible actions.
Calls to Community Health Systems and Health Management Associates were not returned by press time. Katrina Allen, a spokeswoman for Glenview Capital, declined to comment.
AFT, whose members’ pension funds are also large shareholders in both companies, this year began a capital stewardship campaign to get their pension funds more involved in corporate governance issues, including manager accountability. AFT pension funds hold $68 million in CHS shares and $34 million in HMA shares.
AFT also represents nurses and other staff involved in contract disputes at some CHS facilities.
Glenview Capital CEO Larry Robbins is an active supporter of education reform in New York City, which is opposed by the AFT.
This summer, Glenview succeeded in replacing HMA’s board and management.
In her letter, Ms. Weingarten said the merger is also being challenged in court by other shareholders over the bid price.
“In summary, the proposed sale and acquisition of HMA by Community Health Systems raises serious legal and regulatory questions,” Ms. Weingarten wrote.
“The questions raised here need to be answered in advance of any further action by the parties,” she added.