A Delaware court ruled in Kindred Healthcare's favor, rejecting a shareholder lawsuit seeking to block the home healthcare provider's proposed sale to Humana and two private equity firms.
The Court of Chancery of the State of Delaware on Tuesday denied shareholder Brigade Capital Management's request for a preliminary injunction against the $4.1 billion deal announced in December, according to Kindred.
Kindred shareholders will vote Wednesday to approve or reject the merger.
Under the deal, Humana and two private equity firms—TPG Capital and Welsh, Carson, Anderson & Stowe—will split Kindred into two companies, with TPG and Welsh taking over its long-term care hospitals and inpatient rehab facilities.
The two private equity companies and Humana together will operate Kindred's home health, hospice and community care businesses as a stand-alone company, with Humana taking a 40% stake.
In a December letter to Kindred President and CEO Benjamin Breier, Brigade Capital railed against the deal's $9 share valuation as "disappointing and grossly inadequate." Brigade Capital owns a 5.8% stake in Kindred.
Brigade Capital wrote that Kindred's management chose to "pursue a transaction that severely undervalues the company and ensures that the buyers—rather than existing shareholders—will reap the benefits of the value enhancement the improved business will generate."
