Kindred takes $533M Gentiva offer to shareholders

AP News
Posted: May 15, 2014 7:53 AM

LOUISVILLE, Ky. (AP) — Kindred Healthcare is taking a $533 million bid for Gentiva Health Services directly to its shareholders after the health and hospice services company rejected its offer earlier this week.

Shares in Gentiva spiked more than 60 percent before the opening bell Thursday after Kindred went hostile with its bid.

Kindred is offering $7 in cash and $7 in its stock for each Gentiva share, representing a 64 percent premium over the Wednesday closing price for Gentiva. Kindred also said it would be willing to make it an all-cash deal, if Gentiva's board finds that more acceptable.

If Gentiva's debt is included, Kindred values the deal at about $1.6 billion.

Gentiva in a letter Tuesday said that it had carefully considered the unsolicited proposal, but that the company board believes that its "long-term strategy as a stand-alone company will generate substantially more value to our shareholders."

Kindred CEO Paul Diaz said Thursday that Gentiva shareholders, including the 20 percent who own stock in both companies, would support the deal if given the chance.

"We have undertaken extensive efforts and had several private discussions with Gentiva's management team in an effort to engage Gentiva on a mutually acceptable transaction," Diaz said. Diaz said, however, that Gentiva has said repeatedly that it doesn't want to discuss a deal.

Kindred Healthcare Inc., based in Louisville, runs nursing and rehabilitation centers, and provides home hospice and health services. The combined company would operate in 47 states and serve nearly 127,000 patients each day.

By the close of trading Wednesday, shares of Gentiva this year had fallen 31 percent. Shares in the Atlanta company jumped $5.26 to $13.80 a couple hours before markets opened Thursday.

Kindred is holding a conference call with investors and analysts at 8:30 a.m. Eastern time.