Tenet shares soar after Community Health bid

* Shares rise to $6.43 after $6/share bid

* Other bidders may step in — analyst

NEW YORK, Dec 10 (BestGrowthStock) – Shares of Tenet Healthcare Inc
(THC.N: ) soared well above the buyout offer price from rival
hospital chain Community Health Systems Inc (CYH.N: ) as analysts
said a winning bid for Tenet may need to be higher.

Tenet shares jumped 50 percent to $6.43 in early trading on
the New York Stock Exchange on Friday, after Community made an
unsolicited bid of $6 per share, or $3.3 billion, late on
Thursday. Tenet rejected its larger rival’s offer as
“opportunistic” and “inadequate.” [ID:nN09268560]

Including debt, the deal is valued at some $7.3 billion,
according to Community.

Community shares were 5 percent, or $1.59, at $30.05 in
early trading.

Leerink Swann analyst Jason Gurda believes that Community
Health could buy Tenet for $7 per share and the deal would
still slightly add to earnings.

“We believe Community Health would most likely be willing
to raise its offer and that frustrated Tenet shareholders are
likely to accept a deal,” Gurda said in a research note.

Oppenheimer & Co analyst Michael Wiederhorn said another
bidder could step in, including private equity, which has been
actively involved in the hospital sector in the past.

Wiederhorn said the deal amounts to about 6 times 2011
EBITDA (earnings before interest, taxes, depreciation and
amortization), well below the 7.8 times paid for the leveraged
buyout of HCA, another large hospital chain, and 8.4 times than
Community paid for Triad Hospitals.

“We would not be surprised if the price of the deal ended
up in excess of $6 per share,” Wiederhorn said in a research
note.
(Reporting by Lewis Krauskopf; Editing by Derek Caney)

Tenet shares soar after Community Health bid