Tenet Likely to Drop Healthscope Bid, Investor Says (Correct)
(Corrects deal target in the third paragraph of story published June 3.)
Tenet Healthcare Corp. will likely drop its bid for Healthscope Ltd., Australia’s second-largest hospital operator, after pressure from shareholders, one of Tenet’s largest investors said.
“I would like them to back down, and I believe they will,” Larry N. Feinberg, president of Oracle Investment Management Inc., of Greenwich, Connecticut, said today in an interview. Oracle is Tenet’s fourth-largest holder, with a 3.3 percent stake as of March 31, according to Bloomberg data.
Rick Black, a spokesman for Dallas-based Tenet, declined to comment on whether the company would withdraw its offer for Healthscope. Tenet, the third-largest publicly held U.S. hospital chain, said June 1 it was in buyout talks with the Melbourne-based company about an acquisition. A group comprised of Blackstone Group LP, TPG Capital and Carlyle Group, has also made an offer for Healthscope, according to a person familiar with the matter.
Tenet’s shares fell 6 cents, or 1.2 percent, to $5.03 at 4 p.m. in New York Stock Exchange composite trading. The company fell 17 percent on June 1 after announcing its interest in a Healthscope deal, before increasing 7.8 percent yesterday.
Tenet’s management was “shocked” by the market’s initial reaction to the Healthscope bid, said Feinberg, who said he spoke to company executives about the deal. “Investors aren’t ready to see these guys invest outside the United States,” he said.
Tenet will “have to back out because this deal is dilutive to the stock price,” Sheryl Skolnick, an analyst at CRT Capital Group in Stamford, Connecticut, said yesterday in an interview.
“Management and the board would be well advised to just slow down, take a deep breath and really consider whether they want to take this bad transaction and shove it down the throats of shareholders,” Skolnick said.
To contact the reporter on this story: David Olmos in San Francisco at dolmos@bloomberg.net.
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