Tenet Healthcare Shares Skyrocketed: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hospital operator Tenet Healthcare (NYSE: THC  ) soared a staggering 55% in intraday trading Friday on news that larger rival Community Health Systems (NYSE: CYH  ) offered to buy it for $3.3 billion in November.

So what: The deal, which would create the nation's largest hospital operator if accepted, represents a whopping 40% premium to Tenet's closing price Thursday. Of course, with Tenet having rejected the unsolicited bid as "not remotely fair value," Mr. Market feels confident enough in a substantially higher offer to send the shares well past the offer price. 

Now what: When you make 50% in one morning, taking at least some dough off the table seems like the prudent thing to do. While it might be tempting to hold out for a higher offer, the risk (even if it's small) that Community Health might back off altogether might not be worth taking. With Tenet peers like LifePoint Hospitals (Nasdaq: LPNT  ) and Health Management (NYSE: HMA  ) both trading at reasonable price multiples, there might be cheaper places to place your bet.

Interested in more info on Tenet? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1396436, ~/Articles/ArticleHandler.aspx, 9/22/2014 2:42:23 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement