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Tenet, CHS have work to do after takeover battle

Wall Street Journal/Dow Jones Newswire, May 12, 2011

Tenet Healthcare Corp., having fended off Community Health Systems Inc.'s hostile takeover bid, now must show it was right to reject the deal without even negotiating with its peer hospital operator. Community Health, meanwhile, leaves the battle with bruises -- notably a share price deflated by a Tenet lawsuit alleging billing and admissions violations, a set of related government probes and several resulting shareholder lawsuits. Also, an activist investor is trying to oust three board members at next week's shareholder meeting over Community's response to questions about the billing matters. Community bowed out rather than take the takeover fight to Tenet's shareholder meeting later this year because management thought publicity surrounding the bid was interfering with efforts to acquire nonprofit hospitals, Chief Financial Officer Larry Cash said at an investor conference Tuesday. A day earlier, Tenet rejected Community's stated last offer of $7.25 a share. "That dual path looked like it was going to be challenging with the type of toxic comments that were coming out," he said.