Community Health Systems Inc. has increased its offer to takeover Tenet Healthcare Corp by 20% to $4.07 billion cash, or $7.25 a share from $6. At the end of last year the company had offered $6-per-share cash and stock offer, this was turned down by Tenet.
Tenet Healthcare is reluctant to be taken over. A hostile takeover bid describes a situation in which one company tries to buy another company that does not want to be bought.
This new offer represents a 69% premium to Tenet's share price in December 2010, before Community Health Systems started bidding.
Community Health Chairman and Chief Executive Wayne T. Smith said:
"We call on the Tenet Board to uphold its fiduciary duties and enter into good-faith discussions with us to conclude a mutually beneficial transaction. Unless we see meaningful engagement by May 9, 2011, we will withdraw the offer and move on to the many other compelling growth opportunities available to us."
A $3.3 bid last month was turned down, with Tenet saying the cash offer substantially undervalued the company. Tenet said it was concerned about Community Health System's business practices.
Tenet Healthcare has already adopted a poison bill which stops Community Health from gaining ownership to too much of its stock. Community Health then tried to get rid of Tenet's board. Tenet filed a lawsuit in federal court last month alleging that Community Health was overcharging Medicare. Tenet said that Community Health figures regarding cost savings were unreliable and based on fraudulent practices.
Tenet Healthcare Corp.One of USA's major investor-owned health care delivery systems, consisting of:
- 84 outpatient centers
- 49 acute care hospitals
- 57,000 employees
- 512,972 admissions (CY'10)
- 3.9 million outpatient visits (CY'10)
- $9.2 billion net operating revenues (CY'10)
Community Health Systems Inc.A Fortune 500 company based in Franklin, Tennessee. America's largest non-urban provider of general hospital healthcare services as far as the number of acute care facilities are concerned. In 2009 it operated 120 hospitals in 28 states, with an aggregate of approximately 19,400 licensed beds.
2010 Revenue: $13.0 billion.
Written by Christian Nordqvist