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Tenet rejects new Community Health Systems bid

Fri, 04/22/2011 - 8:45am
The Associated Press

Tenet Healthcare Corp. said Friday that its board is rejecting Community Health Systems Inc.'s latest offer, which values Tenet at about $3 billion in cash.

Tenet said the new offer of $6 per share still "grossly undervalues the Company and is not in the best interests of Tenet or its shareholders." Community Health Systems, which offered in November to buy Tenet for $5 per share in cash and $1 per share in stock, changed its bid Monday to all cash. The deal also includes about $4 billion in debt held by Tenet.

In December, after Tenet's board turned down the initial offer, Community Health Systems went directly to Tenet shareholders and said it would nominate its own slate of directors to Tenet's board.

Dallas-based Tenet is fighting Community Health's offer with a "poison pill" stock dilution measure and has delayed its annual meeting by six months, to November.

Tenet also filed a lawsuit claiming Community Health bilks Medicare by admitting patients to its hospitals when they should only be kept under observation. Community Health, based in Franklin, Tenn., has denied the allegation and asked a judge to dismiss the lawsuit.

Community Health runs about 130 hospitals in fast-growing and non-urban markets while Tenet's 50 hospitals are in urban and suburban markets.

When Community Health made its bid public, it amounted to a premium of about 40 percent over Tenet's share price.

Tenet's shares rose 6 cents Thursday to close at $6.77, about 13 percent above the offer price. They rose another 13 cents after hours Thursday.

Community Health's shares fell 20 cents Thursday to close at $30.69. The markets were closed Friday.

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