Community Health Systems is offering shareholders of Tenet Healthcare more than $7 billion in a move to create the nation's most diverse hospital network.

Franklin-based CHS this afternoon disclosed that it approached the board of Dallas-based Tenet last month but was officially rebuffed early this week. Calling a merger of the two companies "both financially and strategically compelling," it has released a letter sent by Chairman, President and CEO Wayne Smith to Tenet's directors in response.

"We do not understand how you could state in your letter of December 6 that our proposal does not offer 'even remotely fair value' to Tenet shareholders," the letter reads. "Given your position, we have concluded it is now appropriate to publicly disclose our proposal. This will allow Tenet shareholders to decide for themselves if they prefer the substantial premium and high degree of certainty offered in this transaction — or would rather continue to accept the significant risk, especially in light of recent operating performance, that Tenet can achieve greater present value for shareholders through execution of its strategic plan in the years ahead."

A combined CHS Tenet would have annual revenues of more than $22 billion and control almost 33,000 beds in urban and rural markets. By comparison, industry leader HCA Inc. now manages about 38,000 beds – concentrated in cities – and rings up annual revenues of about $30 billion.

Shares of Tenet (Ticker: THC) rocketed up in after-hours trading to $6.38 – suggesting perhaps that $6 is merely a starting point or that another buyer might enter the fray – while CHS stock (Ticker: CYH) was down more than 4 percent to $30.25. Year to date, CHS is down about 12 percent.

Updated 9 p.m.:

Tenet issued a news release late Thursday acknowledging the company received an offer from CHS and informing Tenet shareholders that the company’s board, financial and legal advisors “unanimously determined” the acquisition offer is not in the company's best interests:

“The Tenet Board believes the shareholders would be better served by benefiting from 100 percent of the upside inherent in Tenet rather than accepting Community Health’s inadequate proposal. In addition, the Board has serious concerns about Community Health’s ability to integrate and operate a business like Tenet."

Included in the release was the text of a lengthy Dec. 8 letter to Wayne Smith from Tenet’s President and CEO Trevor Fetter and Chairman Edward Kangas. The letter, available at this link, says the CHS bid “grossly undervalues” Tenet. It calls CHS’ stock overvalued and, among other concerns, questions CHS’ ability to integrate Tenet’s facilities — which are larger than a typical CHS hospital — into the Franklin company.

“Wayne, you have been very direct in stating your ambition to acquire Tenet," the letter reads. "Let us be equally direct that we could not be more certain in our belief that your proposal is opportunistic, and would serve only to transfer the value inherent in Tenet to Community Health at the expense of Tenet shareholders. It is clear to us that your standalone prospects have slowed and you are pursuing an acquisition of Tenet to drive the growth you cannot achieve on your own.”