CHS Raises 'Best and Final' Cash Bid for Tenet

Calling it a "best and final offer," Community Health Systems, Inc. on Monday morning raised its all-cash bid to acquire all common stock of rival Tenet Healthcare Corp. to $7.25 per share – up from $6 per share – and gave the Tenet board one week to make a decision.

The deal will expire on May 9 if Tenet has not begun good-faith discussions, and Franklin, TN-based CHS said in a media release that it will withdraw its slate of nominees for the Tenet board, and end its six-month-long bitter and public hostile takeover attempt.

"We are making this offer to bring this matter to a prompt conclusion in the best interests of all concerned," Wayne T. Smith, chairman/president/CEO of CHS, said in a prepared statement. "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."

Tenet issued a statement Monday morning confirming that it will review the new bid to "determine the course of action that it believes is in the best interests of the Company and its shareholders. Tenet’s shareholders are advised to take no action at this time pending the review of the revised proposal by the Tenet Board of Directors."

Smith told the Tenet board in a letter Monday that the $7.25 per share cash offer "offer provides your shareholders a 69% premium to the unaffected stock price when we made public our initial proposal on Dec. 9, 2010, and is our best and final offer based on information currently available to us. It is time to move beyond lawsuits and rhetoric."

CHS has been defending itself against a federal complaint filed by Tenet, alleging that CHS overbilled Medicare by as much as $377 million.

On Dec. 9, 2010, CHS made public an offer to acquire Tenet for $6 per share, including $5 per share in cash and $1 per share in CHS stock. The offer was made in a letter to Tenet's board on Nov. 12, 2010, and rejected on Dec. 6, 2010. On Jan. 14, 2011, CHS told Tenet that it would nominate a full slate of 10 independent director nominees to wrest control of the board at its 2011 Annual Meeting. Tenet delayed the meeting until Nov. 3. On April 18, CHS amended its offer to $6 per share in cash, which Tenet rejected on April 22.

See Also:
Tenet Board Rejects CHS Cash Offer
CHS, Subject of HHS Probe, Ups Tenet Cash Offer
Tenet Claims CHS Overbilled Medicare $377M
CHS Opens Another Defense of Medicare Admissions
CHS Defends Medicare Admissions Practices
CHS Board Shakeup Sought by Shareholders
CHS Asks Federal Judge to Toss Tenet Suit