Community Health Systems issued a statement urging Tenet Healthcare Corp. to engage in good-faith discussions for a mutually beneficial transaction after Tenet enacted a "poison-pill" trigger in its bylaws to make a hostile takeover of the company more challenging.
The statement stated the following:
"Tenet shareholders should be deeply disappointed that their board's response to a compelling 40 percent 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."
Under the "poison pill" amendment, if any person or firm buys more than 4.9 percent of Tenet's shares without its board's approval, the poison pill anti-takeover device allows all other shareholders who own less than that percentage of shares the right to buy additional shares at a bargain price, according to the report. Use of the device drives up the price of acquiring a company and dilutes the shares of the potential acquirer. Tenet also delayed its 2011 annual meeting.
Read the CHS statement on its bid to take over Tenet.
Read more coverage on CHS's bid for Tenet:
- Tenet Adopts Measure to Ward Off CHS Takeover
- CHS Still Committed to Acquiring Tenet
- Community Health Prepares For Hostile Takeover of Tenet
The statement stated the following:
"Tenet shareholders should be deeply disappointed that their board's response to a compelling 40 percent 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."
Under the "poison pill" amendment, if any person or firm buys more than 4.9 percent of Tenet's shares without its board's approval, the poison pill anti-takeover device allows all other shareholders who own less than that percentage of shares the right to buy additional shares at a bargain price, according to the report. Use of the device drives up the price of acquiring a company and dilutes the shares of the potential acquirer. Tenet also delayed its 2011 annual meeting.
Read the CHS statement on its bid to take over Tenet.
Read more coverage on CHS's bid for Tenet:
- Tenet Adopts Measure to Ward Off CHS Takeover
- CHS Still Committed to Acquiring Tenet
- Community Health Prepares For Hostile Takeover of Tenet