Tenet uses poison pill to fend off takeover: Hospital company exercises shareholder-rights initiative.

by Russ Britt for Market Watch, January 7th, 2011.

LOS ANGELES (MarketWatch) — Tenet Healthcare Corp. said Friday it adopted a poison-pill, shareholder-rights plan designed to fend off the unwanted takeover proposal offered last month by rival hospital operator Community Health Systems Inc.

Dallas-based Tenet’s (THC 6.89, -0.02, -0.29%) twofold plan involves adopting a rights agreement that would limit Community’s (CYH 37.16, -0.87, -2.29%) ability to use $2 billion in Tenet’s net loss carry-forwards for tax purposes. Income-tax rules limit the use of net operating losses for tax purposes if there is a change in ownership.

The poison-pill aspect of the plan involves the issuance of one preferred stock-purchase right for every common share of the company as part of a nontaxable dividend.

The plan with both tactics is to deter any shareholders from getting a stake of more than 4.9% of the company, or an “acquiring person.”

“A person who becomes an ‘acquiring person’ may be subject to significant dilution in their holdings. The board of directors may, in its sole discretion, exempt any person from being deemed an ‘acquiring person’ for purposes of the [rights agreement],” the company said in a statement. (continue reading… )



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