Community Health Systems Adopts Poison Pill

Community Health Systems Inc. on Monday said it has adopted a poison pill, two weeks after it said it is exploring a deal and as a Chinese billionaire has been building a stake in the company.

Tianqiao Chen recently increased his holding to 9.9% of Community Health shares, according to a recent filing.

Late last month, Community Health Systems, one of the largest U.S. hospital companies, said it was exploring a deal after struggling to digest its acquisition of Health Management Associates Inc.

The Franklin, Tenn.-based company said it had no timeline for its talks with advisers and "no certainty that the exploration will result in any kind of transaction."

On Monday, Chief Executive Wayne Smith said the board is exploring a "variety of options" with private-equity sponsors "as well as other potential alternatives that would benefit all stockholders of the company."

He said the company adopted a stockholder protection rights agreement for six months "in light of the recent accumulation of a significant block of the company's common stock" to prevent someone from buying a potentially controlling block before the company is finished reviewing its options.

He said the rights agreement "is not intended to and will not prevent a transaction involving the company's stock at a full and fair price."

Shares, flat after hours, have lost 48% of their value this year.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

October 03, 2016 18:45 ET (22:45 GMT)

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