Community Health Systems adopts poison pill to prevent takeover
Struggling healthcare company says provision will thwart any acquisition of a controlling block of stock for six months.
CHS headquarters-Franklin, TN
In an attempt to maintain control over their financial future, Community Health Systems has thrown up a temporary block against anyone acquiring a controlling block of their stock.
Referred to as a "poison pill," CHS has put in place a short-term Stockholder Protection Rights Agreement for the next six months as they continue to explore the full or partial sale of the Franklin-Tennessee based company.
Chinese billionaire Tianqiao Chen has recently increased his holdings in CHS shares to 9.9 percent, according to the Wall Street Journal, who also reported that CHS shares have lost 48 percent of their value this year.
[Also: Community Health Systems sells off 4 rural hospitals to Curae Health]
"The Rights Agreement is not intended to and will not prevent a transaction involving the Company's stock at a full and fair price. The Rights Agreement does not in any way weaken the Company's financial strength or interfere with its business plans or interfere with the Company's exploration of options or alternatives," said Wayne T. Smith, CHS chairman and CEO.
Several weeks ago the company announced it was in talks with its financial advisors and other key parties, but stressed they were not rushing the process and there was no guarantee there would be any transaction.
"The discussions are at a very preliminary stage and there is no timeline established for this review," Smith said.
Twitter: @BethJSanborn
