Tenet Healthcare Corp. has accused Community Health Systems Inc. of engaging in an effort to nominate candidates for election to the Tenet board of directors "solely to help advance its inadequate and opportunistic proposal to acquire Tenet."
In a statement Monday, Tenet said that it has rejected Community Health's unsolicited proposal to acquire Tenet for $6 per share in cash and stock, which "grossly undervalued Tenet and as not in the best interests of Tenet or its shareholders."
It said that "Tenet shareholders – not Community Health – deserve to benefit from Tenet's growth as we continue to expand margins and benefit from the strategic investments we are making in our business."
The Tenet statement says that it has demonstrated with strong growth for more than five years that its "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."
Earlier, Community Health posted a notice saying it intends to nominate directors for election at the 2011 annual meeting of Tenet Healthcare Corp. It said that on Nov. 12, CHS offered to acquire Tenet for $6 per share, including $5 per share in cash and $1 per share in CHS common stock, "representing a premium of 40% to Tenet's unaffected stock price."
The offer was rejected on Dec. 6, and CHS made its offer public on Dec. 9.
"It is unfortunate that Tenet's Board of Directors has rejected our proposal and refused to sit down with us to discuss our premium offer," Wayne T. Smith, chairman, president and CEO of CHS, said Monday.
"We believe Tenet shareholders would be best served by a board focused on maximizing shareholder value and we intend to purpose directors who will look out for the interests of Tenet shareholders. We are convinced of the powerful logic of combining CHS and Tenet and, while it remains our strong preference to proceed on a consensual basis, we are fully committed to completing this strategically and financially compelling transaction."
Community Health is located in Franklin, TN, and is the largest publicly traded hospital company in the U.S., with 126 hospitals in 29 states and 19,400 licensed beds. It also says it is a leading operator of non-urban and mid-size market general acute care hospitals.
Based in Dallas, Tenet owns 49 acute care hospitals in 11 states, 64 outpatient centers and has 57,000 employees.