The Story of Tenet Healthcare

A few months ago, Community Health Systems, now the second-largest public hospital company (first is HCA), made a takeover bid for Tenet Healthcare, another large, national hospital chain, with the prospect of becoming the largest hospital chain in the US.  However, after failed attempts, it looks like Community Health has submitted its final proposal on May 2, and expires May 9.  The deal values Tenet at $7.25 a share, which Tenet believes is significantly undervalued (prominent analysts have estimated a $9-$9.50 per share value).  Tenet is currently trading at $6.27 per share and has shown a 9.5% decline since the offer was made, indicating that traders do not believe this deal will go through.  To further complicate matters, Tenet has filed a $280 million lawsuit against Community Health for over-billing Medicare.  Even though Tenet has expressed it will evaluate the deal, most signs point to having no deal.


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