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CHS adopts short-term poison pill to protect stockholders' rights

Franklin, Tenn.-based Community Health Systems is adopting a "poison pill" roughly two weeks after a notable Chinese billionaire increased his holding in the for-profit hospital operator.

Last month, the hospital operator announced its intent to explore a number of possible deals with private equity sponsors and other financial alternatives after disclosing the company's growing financial troubles.

CHS CEO Wayne Smith said the stockholders' rights agreement is in place for the next six months to prevent someone from buying a potentially controlling block of the company before it can fully review other options.

Billionaire Tianqiao Chen recently increased his holdings in the company, maintaining a 13.8 percent stake in CHS.

Mr. Smith notes that the agreement is not intended to and won't prevent a transaction involving the regular buying and selling of company stock in the marketplace.

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