A long-running, hostile acquisition attempt has ended as Community Health Systems abandoned its unsolicited multibillion-dollar bid to acquire Tenet Healthcare. A completed merger would...

A long-running, hostile acquisition attempt has ended as Community Health Systems abandoned its unsolicited multibillion-dollar bid to acquire Tenet Healthcare.

A completed merger would have created the largest for-profit hospital chain in the nation. But Tenet repeatedly fought the takeover, and its board Monday again refused to negotiate with Community Health.

A deal would have had some impact in Georgia. The companies each own hospitals in the state, but without geographical overlap. Franklin, Tenn.-based Community Health has Trinity Hospital of Augusta and Fannin Regional Hospital in Blue Ridge.

Tenet, based in Dallas, Texas, is a much bigger player in the state, though its holdings are concentrated in the Atlanta region. The company’s five hospitals in Georgia are Atlanta Medical Center, North Fulton Regional Hospital in Roswell, South Fulton Medical Center in East Point, Spalding Regional Medical Center in Griffin, and Sylvan Grove Hospital in Jackson.

Tenet also was recently seen as a potential bidder for St. Joseph’s Hospital of Atlanta, which eventually struck a partnership agreement with Emory Healthcare.

Community Health made an unsolicited bid for Tenet in December for $6 a share in cash and stock and an all-cash offer in April. Last week, Community Health raised its “best and final” offer to $7.25 a share and said it would walk away if Tenet failed to begin “good-faith discussions,” according to Bloomberg.

“Investors are back to focusing on the fundamentals” of Tenet,” Art Henderson, an analyst at Jefferies & Co. in Nashville, told Bloomberg. Henderson places a value of $9 to $9.50 on Tenet’s shares.

Last month, Tenet filed a lawsuit accusing Community Health of defrauding Medicare, in what was considered an attempt to derail the takeover. Community Health has also been subpoenaed by federal investigators for the  U.S. Health and Human Services and  the Texas Attorney General’s office, asking for documents related to the Medicare and the Medicaid programs, according to Bloomberg.

Tenet owns 49 hospitals in 11 states. Community Health owns, operates or leases 130 hospitals.

HCA Holdings, based in Nashville, is the largest U.S. hospital company.

Community Health is now likely turn its focus to smaller acquisitions of nonprofit hospital systems, Kevin Fischbeck, an analyst with Bank of America Merrill Lynch, wrote in a note to clients, The New York Times reported.

The financial climate for hospital acquisitions is good, Fischbeck said.

 

 

 

 

 

 

 

 

 

 

A long-running, hostile acquisition attempt has ended as Community Health Systems abandoned its unsolicited multibillion-dollar bid to acquire Tenet Healthcare.

A completed merger would have created the largest for-profit hospital chain in the nation. But Tenet repeatedly fought the takeover, and its board Monday again refused to negotiate with Community Health.

A deal would have had some impact in Georgia. The companies each own hospitals in the state, but without geographical overlap. Franklin, Tenn.-based Community Health has Trinity Hospital of Augusta and Fannin Regional Hospital in Blue Ridge.

Tenet, based in Dallas, Texas, is a much bigger player in the state, though its holdings are concentrated in the Atlanta region. The company’s five hospitals in Georgia are Atlanta Medical Center, North Fulton Regional Hospital in Roswell, South Fulton Medical Center in East Point, Spalding Regional Medical Center in Griffin, and Sylvan Grove Hospital in Jackson.

Tenet also was recently seen as a potential bidder for St. Joseph’s Hospital of Atlanta, which eventually struck a partnership agreement with Emory Healthcare.

Community Health made an unsolicited bid for Tenet in December for $6 a share in cash and stock and an all-cash offer in April. Last week, Community Health raised its “best and final” offer to $7.25 a share and said it would walk away from its effort if Tenet failed to begin “good-faith discussions,” Bloomberg reports.

“Investors are back to focusing on the fundamentals” of Tenet,” Art Henderson, an analyst at Jefferies & Co. in Nashville, Tennessee, told Bloomberg. Henderson places a value of $9 to $9.50 on Tenet’s shares.

Last month, Tenet filed a lawsuit accusing Community Health of defrauding Medicare, in what was considered an attempt to derail the takeover. Community Health has also been subpoenaed by federal investigators for the Department of Health and Human Services and the Texas Attorney General’s office, asking for documents related to the Medicare and the Medicaid programs, Bloomberg reports.

Tenet owns 49 hospitals in 11 states. Community Health owns, operates or leases 130 hospitals.

HCA Holdings Inc., based in Nashville, Tenn., is the largest U.S. hospital company.

Community Health is now likely turn its focus to smaller acquisitions of nonprofit hospital systems, Kevin Fischbeck, an analyst with Bank of America Merrill Lynch, wrote in a note to clients, the New York Times reported.

The financial climate for hospital acquisitions is good, Fischbeck said.

 

 

 

 

 

 

 

 

as opportunistic and inadequate. It also argues that such a deal would make an awkward match, because Tenet generally operates large hospitals and Community Health generally runs smaller ones.

The offer, meanwhile, may set off rival bids for Tenet, according to a Bloomberg/Businessweek report.

The acquisition effort also may reflect an anticipated surge of consolidation in the medical industry, driven by a tough reimbursement climate and in response to health care reform.

 

 


Sign up for our free email alerts and follow us on Facebook and on Twitter @gahealthnews.
Help us fulfill our nonprofit mission with a tax-deductible donation!

Andy Miller

Andy Miller is editor and CEO of Georgia Health News

No comments so far.

Be first to leave comment below.

Your email address will not be published. Required fields are marked *

Please leave these two fields as-is:

Help us pursue our nonprofit mission with a tax-deductible donation.

Credit Cards

EVERY LITTLE BIT HELPS
Donations Welcome

Donate Icon