Tenet Healthcare makes its case
Dallas company gives five-year plan, says its stockholders, not CHS, deserve to benefit from that growth
Jan 11, 2011 1:18 PM
Despite 'poison pill,' Tenet takeover still possible
Tenet Healthcare last week adopted a new shareholder rights agreement designed to block Community Health Systems' $7.3 billion takeover of the Dallas-based hospital operator. The agreement does not, however, mean Tenet (Ticker: THC) won't experience a takeover. According to a research note issued this morning by CRT Capital Analyst Sheryl Skolnick, because Tenet's board can rescind the plan at any time or exempt investors from being categorized as an "acquiring person," the plan "in no way impedes a friendly take-over or even an unfriendly takeover of THC’s Board through a proxy fight." The latter is what CHS (Ticker: CYH) has suggested it would do if Tenet doesn't agree to transaction talks — but because Tenet pushed its shareholder meeting until Nov. 3, that won't happen anytime soon. Here's some more insight from Skolnick's note:We do NOT see THC’s Board and management as entrenched, nor do we see this plan as an indication that it trying to become more so. We also don’t believe that the delay in the Annual Meeting until November 3, 2011 means that management is entrenching itself either: it is giving itself options to generate a ‘white knight’ bid, giving others time to generate a bid and pushing off an expensive and disruptive proxy battle until that bid and due diligence process can be completed. But, we do understand CYH’s point: the delay is not good news for them. If CYH is bidding for THC to augment sluggish internal growth so that it can achieve its already-issued 2011 guidance, then delaying the annual meeting means that CYH can’t complete a hostile deal in time to augment 2011 performance.Additional background is here and here.
Jan 10, 2011 12:47 PM
Tenet adopts poison pill, CHS calls it
In an attempt to deter a takeover by Community Health Systems, Tenet Healthcare has adopted a new stockholder-rights agreement with a "poison pill" provision and pushed its annual shareholder meeting to November. Under a board-approved plan announced Friday afternoon, Tenet says that if an "acquiring person" buys more than 4.9 percent of the company's outstanding shares, the company will distribute preferred stock purchase rights to other stockholders, potentially creating "significant dilution" of the acquiring person's holdings. Tenet said the move will help it protect its $2 billion in net operating loss carry-forwards — which can't be used for tax purposes if the company experiences a change in ownership. In addition, Dallas-based Tenet said it amended its bylaws so it can push its 2011 shareholder meeting to Nov. 3 — 18 months after its 2010 meeting and four months later its previous bylaws would have allowed. After Tenet rebuked CHS' unsolicited $7.3 billion acquisition offer, CHS had planned to nominate a slate of directors to Tenet's board. Franklin-based CHS responded to Tenet's actions with the following statement:“Tenet shareholders should be deeply disappointed that their Board’s response to a compelling 40% premium offer is a double-barreled entrenchment strategy – facilitating a significant delay of their 2011 Annual Meeting and installing a poison pill. We are confident that Tenet shareholders will see these steps for what they are: the actions of a Board that is not working for them. Rather than resorting to delaying tactics, Tenet should engage with us in good-faith discussions to complete a mutually beneficial transaction.”SEE ALSO: Why CHS thinks the Tenet acquisition is 'the right story,' chatter about other potential Tenet suitors and more from our ongoing blog coverage.
Jan 10, 2011 7:01 AM
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Tenet shareholder files suit over CHS bid
A Tenet Healthcare Corp. shareholder is suing the Dallas-based hospital company for not accepting Community Health System's $7.3 billion acquisition offer and refusing to negotiate with CHS officials. He is seeking class action status for the suit. The St. Louis Business Journal has the story at this link. For more on CHS' pursuit of Tenet, click here and here. Dec 27, 2010 2:51 PM
Analyst: $7.50 will be enough for Tenet
Wells Fargo analyst Gary Lieberman says it's not likely another serious bidder for Tenet Healthcare will emerge to challenge Community Health Systems' offer for the Texas company. That means Franklin-based CHS "will not need to pay a significant premium" to its original $6 offer. CHS shares (Ticker: CYH) are up 17 percent since it went public with news of the bid. Dec 23, 2010 9:01 AM
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Tenet defends board pedigree
Tenet Healthcare says Community Health Systems' promise to nominate a slate of prospective directors next spring won't deliver the growth shareholders have come to expect.Tenet has compelling growth prospects and a strong Board of Directors with a broad range of experience. Under the Board’s leadership, Tenet has delivered strong growth for more than five years, demonstrating that our strategy is working. Going forward, we expect significant growth from a combination of acute care revenues, our expanding outpatient business, our business of offering healthcare services to other hospitals, and improved cost efficiencies.
Dec 21, 2010 7:08 AM
'It's going to be difficult for Tenet to fight back'
Tenet Healthcare has thus far rebuffed Community Health Systems’ $7.3 billion acquisition offer, calling it “inadequate” and “opportunistic” — but the Dallas-based company is going to have a hard time continuing to defend against the aggression of Wayne Smith and company without an attractive “Plan B.” “They’re going to have to play another card,” Raymond James analyst John Ransom told NashvillePost.com. Though Ransom said it’s hard to tell what that card may be, the company is going to have to do something, given that CHS is a “determined buyer willing to go hostile, and the market supports the deal.” CHS this morning made clear its commitment to the transaction by announcing its intent to nominate new directors to Tenet’s board at the Dallas company’s 2011 shareholder meeting. Because Tenet is incorporated in Nevada, CHS can’t acquire the business without the consent of Tenet’s board — precluding the company from doing a hostile tender offer, explained Avondale Partners' analyst Kemp Dolliver. “This indicates [CHS] is willing to make it a long process,” Dolliver said. “This is the next avenue they can take to force the process.” Ransom expects Tenet will make some kind of move before the situation escalates to that point, given that shareholders support the deal — as evidenced by the Tenet’s stock price jump (Ticker: THC) since CHS announced the bid. Tenet could propose some other transaction (like a leveraged buyout, a deal with another party or a big stock buyback), try to convince shareholders the company should continue to go it alone, or simply come to terms with CHS. “It’s hard to fight a strategic buyer who has financing and synergies,” Ransom said. “They don’t have a whole lot of defenses at this point.” Dec 20, 2010 1:09 PM
Analyst action: Healthcare Realty, Dollar General, Tenet
Robert W. Baird analyst David Aubuchon says shares of Healthcare Realty Trust are set to 'outperform' the broader market, but has kept his $24 price target on the stock. Healthcare Realty (Ticker: HR) ended Friday trading at $20.38 are down about 5 percent in 2010. Deutsche analyst Michael Baker has hiked his target for Dollar General shares to $39 from $35. That puts him near the top among his peers. Dollar General stock (Ticker: DG) is up almost 40 percent this year. Also at Deutsche Bank, Darren Lehrich has lowered his rating on Tenet Healthcare, the target of Community Health Systems' affection, to 'hold' from 'buy.' The stock is nearly at Deutsche's fair value but Lehrich also implies the bidding may not go much higher from here. Dec 20, 2010 8:18 AM
Looks like CHS investors are already voting on what to do next with Tenet
Dec 17, 2010 7:04 AM
