Tenet Healthcare (NYSE: THC) shareholders are suing Tenet board members for preventing a merger with Community Health Systems (NYSE: CYH), Dallas Business Journal reports.
Former Florida Gov. Jeb Bush is named in the lawsuit as the lead defendant with nine other board members.
Board members adopted a poison pill takeover defense under the pretext of protecting an alleged "tax asset" at the expense of shareholders, according to the lawsuit filed by Indiana Electrical Workers Pension Trust Fund IBEW, a union pension fund. The suit alleges that the board took steps to dig into their positions at shareholders' expense, Courthouse News reports. Tenet paid Bush $245,000 for sitting on the board in 2009.
In December, CHS offered to buy Tenet's shares in a deal valued at $6 per share, 40 percent more than Tenet's price on the day of the announcement, the lawsuit says. Tenet rejected the offer "without any negotiation or due diligence," according to the complaint.
The shareholders want to see the poison pill rescinded and the defendants prohibited from taking defensive measures that might block proper consideration of the CHS offer, and move up the date of the shareholders meeting.
Some of the language in the lawsuit seems to echo comments in a CHS press release issued after the poison pill defense was made. "Tenet's highly paid board has clearly demonstrated its entrenchment," CHS' press release said. "Tenet shareholders deserve better."
A Tenet spokesman would not comment on the suit, but said the offer CHS made was "grossly inadequate to our shareholders."
To learn more:
- read the Dallas Business Journal article
- here's the Courthouse News article
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