Tenet reaches deal to end feud with its largest investor

For-profit hospital operator Tenet Healthcare has reached an agreement with its largest shareholder, Glenview Capital Management, to make several changes to its bylaws, ending a months-long battle over governance of the struggling company.

The spat began in August 2017, when Glenview’s representatives on the board quit over “irreconcilable differences” after Tenet posted a $56 million loss for the second quarter of last year. Tenet responded to the threat of a proxy fight by adopting a “shareholder rights plan” to allow other shareholders to buy shares at a 50 percent discount if any investor acquired 4.9 percent or more of the company. In the upheaval, CEO Trevor Fetter left the company and there was briefly talk of breaking up Tenet along its business lines of hospitals, ambulatory surgical centers and revenue cycle software.

The agreement with Glenview aligns Tenet’s “corporate governance with best practices,” according to a joint press release. Glenview will withdraw its proposal to allow shareholders to take action by written consent without assembling for a meeting and will support Tenet’s board nominees and its recommend proposals at the next annual shareholders meeting.

In return, Tenet won’t be able to implement a similar shareholder rights plan so easily in the future, as approval will now be needed from 75 percent of board members.

“We are pleased to have reached this constructive agreement with Glenview, which demonstrates our ongoing commitment to listening to our shareholders and incorporating their feedback as part of our efforts to strengthen our corporate governance practices,” Tenet CEO and executive chairman Ronald Rittenmeyer said in a statement. “With this agreement in place, we can continue our work on the initiatives we have underway to position us as a stronger leader in healthcare delivery and create additional shareholder value.”

The deal doesn’t solve Tenet’s ongoing financial problems. The company posted a $230 million loss in the fourth quarter of 2017, has continued divestures of hospitals and cut 700 jobs earlier this year.