One of America's biggest hospital operators buys rival to take advantage of Obamacare

The second largest for profit US hospital operator - Community Health Systems - has announced the purchase of its small rival Health Management Associates (release).

CHS will acquire all of the issued and outstanding common stock of HMA for a combination of cash and CHS stock currently valued at $13.78 per HMA share, based on CHS’ closing stock price as of July 29, 2013, and consisting of $10.50 per share in cash plus 0.06942 of a share of CHS common stock for each HMA share.

At a cost of $3.9bn (£2.5bn) the deal is intended to strengthen the firm's base as reforms introduced by President Obama will see sweeping changes in the sector.

Wayne T. Smith, chairman, president and CEO of Community Health Systems:

This compelling transaction provides a strategic opportunity to form a larger company with a diverse portfolio of hospitals that is well positioned to realize the benefits of health care reform and to address the changing dynamics of our industry.

Our complementary markets and the ability to form networks in key states, along with the synergies that will be available to us, can create value for the shareholders of our companies, the communities we serve, our employees and medical staffs. We look forward to working with the physicians and employees of HMA to advance the commitment shared across both organizations to pursue clinical excellence and to deliver quality care for patients.

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