Gentiva urged shareholders not to respond to Kindred's tender offer. It said that its board of directors would review Kindred's proposal and file a recommendation with the Securities and Exchange Commission within 10 business days.
Gentiva shares have been trading just below the offer price since it was disclosed May 15. Shares closed Monday at $13.99 but climbed to $14.60 in after-hours trading.
Analysts believe that shareholder pressure could force Gentiva’s hand at a time when many home health and hospice companies have struggled against declining reimbursement. And Kindred has emphasized in its communications with Gentiva’s management that it has shareholder support.
The larger company also has room to sweeten its bid. For instance, Kindred has said that its cash-and-stock offer could be negotiated as all-cash.
“Should Gentiva’s board commence good-faith discussions, we are willing to offer cash and stock in a structure that would allow Gentiva shareholders to participate in the synergies and upside potential of the proposed combination,” Benjamin Breier, Kindred’s president and chief operating officer, said in a news release.
The offer price represents a 70% premium to Gentiva’s closing share price on the day before the deal was made public.
Kindred said it intends to file for antitrust clearance for the transaction. The company also launched a public offering of 9 million shares (PDF) on Monday to help finance the acquisition and pay down some of its own debt. Underwriters for the offering also will have a 30-day option to purchase an additional 1.35 million shares.
Follow Beth Kutscher on Twitter: @MHbkutscher