Tenet promises a review In a statement on Monday, Tenet said that its board will review the latest offer to determine what course of action would be in its shareholders’ best interests. Twice Tenet’s board has rejected Community Health’s offers that it said grossly undervalued the company.Community Health, meanwhile, touted its latest offer as a 69 percent premium to Tenet’s stock price just before the shop online 2011 company made public in December its initial proposal to buy Tenet.“It is time to move beyond lawsuits and rhetoric,” Community Health’s CEO Wayne T. Smith wrote in an offer letter to Tenet’s board. “Unless we see meaningful engagement by May 9, we will withdraw the offer and move on to the many other compelling growth opportunities available to us.”That shift in tone may reflect Community Health’s weakened appetite to pursue a hostile takeover of Tenet, whose past responses included filing a federal complaint alleging that Community Health encourages medically unnecessary admissions to its hospitals to boost payments from Medicare.Oppenheimer analyst Michael Wiederhorn said in a research note that he considers the possibility of a merger “highly unlikely” now.“After indicating it was in it for the long-term, (Community’s) offer appears to be an exit from the negotiations rather than a more aggressive move,” Wiederhorn wrote.Sheryl Skolnick, an analyst at CRT Capital Group, said she believes Tenet is worth $9 a share, substantially more than Community Health has offered.“We are confident that Tenet’s board will have to take the $7.25 bid more seriously, but the board will likely also weigh the bid against the serious concerns it raised in its lawsuit against Community Health,” Skolnick said, adding that Tenet might reject the new offer.“The existence of multiple investigations has cast even more doubt on the value of Community Health as an owner for Tenet’s assets in our view,” she said.Overall, including that fact that Community Health would assume Tenet’s debt, the price tag on a possible deal would approach nearly $8 billion.Arthur Henderson, an analyst with Jefferies & Co. here, also sees Tenet’s board rejecting the latest bid “on the basis that it remains too low.”Tenet filed a lawsuit last month claiming that Community Health bilks Medicare by admitting patients to its hospitals when they should only be kept under observation, a practice that Tenet said artificially inflates Community Health’s key data and its stock price. Community has denied the allegations and asked a judge to dismiss the lawsuit.There is also a coordinated federal investigation into the hospital chain’s practices.Community Health Systems Inc. upped the ante in its high-stakes bid to acquire the rival Tenet hospital chain on Monday, but analysts say they have serious doubts whether the sweeter $4.07 billion offer will succeed.Franklin-based power balance Community Health’s latest offer to Tenet’s stockholders of $7.25 a share is nearly 21 percent more than it had previously put on the table, but it comes with a tight deadline.In raising its bid from an earlier $6 a share, Community Health called the new proposal its “best and final offer” and gave Tenet’s board until 5 p.m. May 9 to enter into discussions or see Community walk away.
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