Following an ongoing series of acquisition rejections, Kindred Healthcare (NYSE:KND) has again increased its offer to buy Gentiva Health Services (NASDAQ:GTIV).
Gentiva recently rejected Kindred’s offer to acquire all outstanding shares of the company’s common stock for $14.50 per share, saying the offer undervalued the company and was not in the best interests of its shareholders.
But now Kindred says it will pay $16 per share in cash to buy up to a 14.9% stake in Gentiva — the maximum amount of shares outstanding that can be accepted in the amended offer, given Gentiva’s implementation of a “poison pill,” or a shareholder rights plan that prohibits any one entity from acquiring more than a 15% stake.
“It is important to note, however, that Kindred has a robust pipeline of external growth opportunities and organic initiatives that we are pursuing in parallel with the Gentiva offer,” says Paul J. Diaz, Chief Executive Officer of Kindred, in a written release. “If the 14.9% minimum tender condition is not met, we will withdraw our offer, and if the Gentiva board remains unwilling to commence discussions, we will turn our attention toward these other avenues for value creation.”
Kindred previously stated that it would increase its bid to a 14.9% stake if Gentiva declined its offer. In a regulatory filing, Kindred said it expected to pay about $80 million for the 14.9% stake.
Gentiva common stock had not closed above $16 per share since July 29, 2011, according to a written release of Kindred’s bid. Kindred’s offer represents an 87% premium over Gentiva’s closing share price on May 14, the day prior to its initial bid.
Written by Emily Study