Community Health Systems Inc.'s hostile takeover bid for Tenet HealthCare Corp. took another twist Monday morning when CHS reconfigured its buyout offer on its Dallas-based rival to $6 in cash per share.
The new bid was launched just three days after Franklin, TN-based CHS acknowledged that it was "cooperating fully" with a subpoena issued by the Department of Health and Human Services, which is investigating alleged billing irregularities in Medicaid and Medicare.
Tenet on Monday morning confirmed receiving the latest CHS bid, but said it was advising shareholders to take no action at this time.
It is not clear if the HHS subpoena stems from a complaint filed by Tenet in a Dallas federal court last week, alleging that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors.
Even under a cloud of uncertainty, CHS Chairman/President/CEO Wayne T. Smith made it clear that he would push for the Tenet acquisition. "Converting our offer to all cash underscores our commitment to completing this transaction and renders Tenet's irresponsible and inaccurate lawsuit irrelevant to our offer. We are confident that our business practices are appropriate and we will respond in detail to Tenet's claims in due course," Smith said in a media release Monday morning announcing the new buyout offer.
In the previous offer, made in December, CHS offered $5 per share in cash and $1 per share in CHS common stock. Monday's offer was made in a letter to Tenet's Board of Directors, CHS said in a media release.
"Tenet shareholders should be outraged by the billions of dollars in shareholder value that the Tenet Board has destroyed for its own shareholders and the industry at large as a result of its reckless and self-serving allegations. We are confident that Tenet shareholders will hold the entrenched Tenet Board accountable for this scorched earth response to our acquisition proposal," Smith said in a media release.
"Despite the value-destroying defensive tactics employed by the Tenet Board, we remain ready to engage in constructive discussions to move this transaction forward without further delay. As we have made clear, we would welcome the opportunity to review any additional information Tenet can provide and are prepared to recognize any additional value it can demonstrate," Smith said.