INDIANAPOLIS (AP) — Shares of Community Health Systems Inc. fell Tuesday as Wall Street remained doubtful that rival hospital operator Tenet Healthcare Corp. will accept an increased buyout offer.
THE SPARK: On Monday, Franklin, Tenn.-based Community Health raised its offer by 21 percent to $7.25 per share, or about $4.06 billion. But it said the latest bid will expire May 9 unless Tenet is open to talks. It said new offer was its "best and final offer" based on information currently available.
Analysts have said it is not likely Tenet will accept the offer. The board of Dallas-based Tenet had rejected a $6 per-share, all-cash offer from Community Health last month, and the companies have been fighting over a deal since last fall in a dispute that has spilled into federal court.
Recommended For You
THE BIG PICTURE: Community Health initially offered $5 per share in cash and $1 per share in stock in November. It took the offer directly to Tenet shareholders in December after Tenet rejected the bid.
Community said in January it would nominate its own slate of directors to Tenet's board, prompting Tenet to adopt a "poison pill" stock distribution measure to deter the takeover bid.
A poison pill defends a company against takeovers by diluting the holdings of an unwanted acquirer. Tenet also has delayed its annual meeting and election of directors to November.
Meanwhile, Tenet filed a lawsuit in April claiming Community Health bilks Medicare by admitting patients to its hospitals when they should only be kept under observation, a practice that Tenet said leads to artificial inflation of Community Health's stock price.
Community Health has denied the allegation and asked a judge to dismiss the lawsuit.
THE ANALYSIS: Raymond James analyst John Ransom downgraded shares of Community Health to "Market Perform" from "Outperform," citing the receding prospects for a Tenet deal. He said the stock is likely fairly valued and the company could face some pressure from government investigations.
"With Tenet's board likely rejecting Community Health's best and final offer, we think the Community Health-Tenet merger prospects are dead," he wrote in a note to investor.
SHARE ACTION: Down $1.05, or 3.5 percent, to $29.17. The stock has traded between $22.33 and $42.50 over the past 52 weeks.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
