To finance part its pending acquisition of Vanguard Health Systems (VHS +0.1%), Tenet Healthcare (THC -1.7%) is selling $2.8B of senior unsecured notes and $1.8B of senior secured notes through a private placement.
The secured notes will be guaranteed by and secured by a pledge of the capital stock and other ownership interests of certain of Tenet's subsidiaries.
In addition to financing the acquisition, some of the proceeds will also be used to refinance certain of Vanguard's existing indebtedness.
"This marks a turning point for the company in which we'll be more aggressive in acquisitions," Tenet Healthcare (THC +5.2%) CEO Trevor Fetter tells CNBC, after agreeing to acquire Vanguard Health for $21/share. Fetter goes on to say that he looks forward to an "expanded acquisition pipeline in the acute care business."
More interesting tidbits from Deutsche Bank's upgrade of Tenet Healthcare (THC +2.1%): Analyst Darren Lehrich (who spoke with management) says THC did not rule out "large-scale M&A (acquiring other investor-owned chains)," fueling some speculation about a deal for Health Management Associates (HMA +0.8%). A nice thought perhaps, but Lehrich says THC noted its recent strategy of "divesting rural assets," something HMA has a lot of.
Tenet Healthcare (THC) rejects a third buyout proposal from Community Health Systems (CYH), at $7.25/share, saying that the $3.52B offer undervalues the company. Additionally, Tenet authorizes a $400M stock repurchase program. THC -2%, CYH +3.2% premarket. (PR)
Community Health Systems (CYH -1.2%) may have doomed a proposed takeover of Tenet Healthcare (THC +0.2%) when its third offer was still so low that it would need to be raised by almost $2B to be on par with past hospital deals. The offer of "$7.25 is not going to be enough to bring the Tenet board to the table," one observer says.
The saga continues: Community Health (CYH) raises its offer for Tenet Healthcare (THC) to $7.25/share, calling it a "best and final" bid; unless Tenet begins "good faith" negotiations by May 9, the offer will expire. Tenet -6.2% premarket to $6.50.
Tenet Healthcare (THC) rejects Community Health Systems' (CYH) latest all-cash $3.3B bid, saying the price of $6 a share "grossly undervalues the company." However, Tenet does say that it has "never been opposed to a sale." (PR)
Community Health Systems (CYH) is converting its $3.3B bid for Tenet Healthcare (THC) into an all-cash $6/share offer in an effort to sidestep potential complications of a lawsuit filed by Tenet. (background)