Tenet Healthcare Corp., Dallas, said its board has approved a stockholder-rights agreement that would deter a takeover attempt, according to a news release.
Tenet board OKs stockholder-rights agreement
Last month, Community Health Systems, Franklin, Tenn., publicized its bid to acquire Tenet in a deal worth $7.3 billion in cash, stock and assumed debt. Tenet's management has spurned Community's overtures so far, saying the offer “grossly undervalues” Tenet and also casting doubt on Community's ability to operate in Tenet's competitive, urban markets.
The Tenet board also amended its bylaws to delay its 2011 annual shareholders meeting until Nov. 3, 2011, according to the release. For each year starting in 2004 and through 2010, Tenet conducted its annual shareholders meeting in May. Community announced last month that it would seek to nominate and elect directors to Tenet's board.
Tenet has about $2 billion of net operating loss tax assets that can be used to shield future profits from federal corporate tax, but those assets might be jeopardized under tax laws if a change in ownership of the company occurs. The stockholder-rights plan would distribute preferred shares to stockholders as of Jan. 17 should any entity become an “acquiring person” by acquiring more than 4.9% of the company's shares outstanding. As a result, an acquiring person would have its shareholdings significantly diluted by the rights plan, according to Tenet.
The Tenet board may vote to exempt any entity from being deemed an acquiring person, according to the release.
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