Glenview Capital Partners rejected hospital operator Health Management Associates Inc's HMA.N offer to add a few of the hedge fund's nominees to its board, reiterating its demand for a complete overhaul of the board.
Glenview rejected the idea of a "hybrid board" including nominees from HMA, saying a shareholder vote was already underway to decide the outcome.
HMA, which is being bought by larger peer Community Health Systems Inc (CYH.N) for $3.9 billion, has been under pressure from Glenview, which has said it wants to replace HMA's directors and set the company on a different course.
Glenview, which owns a 14.6 percent stake in HMA, has opposed the Community Health offer, saying it "establishes an important floor value" that should serve as a basis for seeking greater value to HMA shareholders.
HMA said that after discussions with shareholders it would approach Glenview with a proposal to add its nominees to the board.
"HMA is prepared for one of the Glenview nominees to be Chairman of the Board," it said in a statement late on Tuesday.
The hospital group last month urged shareholders to reject Glenview's attempts to replace the board, calling the hedge fund's actions a distraction.
Spokespersons for Glenview and Community Health could not be reached for comment outside regular business hours.
(Reporting by Aman Shah and Vijay Vishwas in Bangalore; Editing by Richard Pullin and David Cowell)