US hospital chain Community Health bids $3-bn for Tenet Healthcare

Leading US hospital chain Community Health Systems Inc CHS is taking its unsolicited $3-billion takeover offer for Tenet Healthcare Corp public, after its smaller rival rejected its bid as "opportunistic" and "inadequate."

Wayne Smith, CEO of Franklin, Tennessee-based CHS, last month sent a letter to the board of Tenet offering to buy its Dallas, Texas-based rival for $6 a share comprising of $5 in cash and $1 in CHS stock.

The offer now represents a premium of 40 per cent over Tenet's yesterday closing price.

The total value of the transaction would be approximately $7.3 billion, including $3.3 billion of equity and approximately $4 billion of net debt.

CHS said that the merger is both financially and strategically compelling and the premium of 40 per cent is materially higher than the average premium paid in similar size transactions over the last five years.

The merger would create the second-largest hospital chain in the US, with 176 hospitals across 30 states and annual revenue of about $22 billion.