Community Health Systems CEO Wayne Smith said that the hospital company intends to let lapse a poison pill defense against a potential hostile takeover as it pursues a turnaround that includes hospital and asset divestitures.
Speaking on the sidelines of the year's first luncheon program of the Nashville Health Care Council, Smith said the shareholder rights plan—as he preferred to call it—will expire as planned on April 1.
Smith declined to say whether he believed the prospect of a takeover attempt had ended. But he noted that Chinese billionaire Tianquio Chen, who bought 15.5 million shares of CHS last year to become its largest shareholder, has stated his desire to remain a passive, rather than activist, investor.
CHS, the nation's second-largest investor-owned hospital company, put in place a poison pill in October at the height of Chen's share-buying activity. Smith said at the time that it was being implemented to give CHS an opportunity to sort out its business restructuring without the distraction of external investors possibly making a hostile play for the company.
There were rumors that a buyer might step forward to negotiate a sale with CHS of the entire company. Those rumors, which circulated around private equity group Apollo Global Management possibly being a buyer, have quieted. Smith declined to comment whether a single buyer could still be sought for all of CHS.
A poison pill makes it more expensive for unwanted investors to buy a company by going directly to shareholders and around management.
Smith said the turnaround of CHS is going according to plan. The company is selling hospitals, its home health business and other assets to reduce a $15 billion mound of debt.