Community Health Bid Doomed With $2 Billion Deficit: Real M&A

Community Health Systems Inc. may have doomed a proposed takeover of Tenet Healthcare Corp. when its third offer was still so low that it would need to be raised by almost $2 billion to be on par with past hospital deals.

Community Health boosted its unsolicited bid for Tenet on May 2 to $7.25 a share in cash, or $7.3 billion including net debt, according to data compiled by Bloomberg. That values Dallas-based Tenet at 7.4 times earnings before interest, taxes, depreciation and amortization, the cheapest hospital acquisition since 2003, the data show. To reach the median 9.3 times Ebitda for takeovers in the industry greater than $500 million, Community Health would have to pay $9.2 billion, the data show.