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June 16, 2014 12:00 AM

Kindred to start building stake in Gentiva

Beth Kutscher
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    Kindred Healthcare is making its move for Gentiva Healthcare Services, despite the smaller company’s insistence that it wants to remain independent.

    The Louisville, Ky.-based post-acute-care operator said it intends to build a 14.9% stake in Gentiva and become the home health and hospice company’s largest shareholder. Gentiva last month adopted a poison pill that prevents any entity from acquiring more than a 15% stake.

    Kindred plans to begin the cash tender offer Tuesday (PDF) and will pay $14.50 per share. The offer values Atlanta-based Gentiva at $573 million, for a total purchase price of $1.6 billion including the assumption of debt.

    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

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      • Current News
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      • Digital Health
      • Transformation
        • Patients
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        • Care Delivery
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      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • 40 Under 40
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
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      • Hospital Financials
      • Staffing & Compensation
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