In a deal that would create the country's largest post-acute-care provider, Kindred Healthcare announced plans to purchase RehabCare Group for $1.3 billion in stock, cash payments and assumption of debt, according to a joint news release from the companies.
Kindred Healthcare to acquire RehabCare Group for $1.3 billion
The transaction, which has been approved by the boards of both companies, would expand Louisville, Ky.-based Kindred's system to 118 long-term acute-care hospitals, 226 nursing and rehabilitation centers and 121 inpatient rehabilitation hospitals, according to a Kindred news release. Kindred officials expect the acquisition to close by June 30, pending approvals from the Federal Trade Commission and other licensing bodies.
Under the terms of the deal, stockholders of St. Louis-based RehabCare would receive payments equal to about $35 per share, including $26 in cash and 0.471 of a common share in Kindred. About 12 million shares will be issued as part of the deal, according to the release. The aggregate value of $1.3 billion for the deal includes $400 million in existing debt.
Both companies also announced year-end financial results Tuesday. Kindred recorded 2% growth in consolidated revenue in fiscal 2010 to $4.4 billion, although net income dropped 10% in that time to $56 million. Kindred acquired six hospitals in the fourth quarter of 2010, bringing its total before the RehabCare deal to 89.
RehabCare saw swift revenue growth in fiscal 2010, as consolidated operating revenue rose 57% to $1.3 billion and net income nearly tripled to $62.5 million, according to a company news release. RehabCare operates 34 long-term acute-care and rehabilitation hospitals.
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