After a summer-long bid war and months of subsequent hush-hush, it finally happened: Kindred Healthcare, Inc. (NYSE: KND) and Gentiva Health Services, Inc. (NASDAQ: GTIV) have agreed to merge in a deal valued at $1.8 billion that will create a national powerhouse in the home health and post-acute care sector.
WIth the agreement reached Thursday, Kindred will acquire all of the outstanding shares of Gentiva common stock for $19.50 per share in a combination of cash and stock.
Under the agreement’s terms, Gentiva shareholders will receive $14.50 per share in cash and $5 of Kindred common stock, which equates to 0.257 shares of KND common stock, the company stated in a release.
The purchase price for the transaction represents a 128% premium to Gentiva shares since Kindred’s offer to acquire the company became public, said Kindred CEO Paul Diaz in a written statement.
“This merger represents a successful conclusion to a process in which, from the beginning, we have focused on maximizing value for Gentiva’s shareholders consistent with our Board’s responsibilities while ensuring the future success of the company,” Diaz stated.
The combination of both companies will not only further Kindred’s position as a national post-acute and rehabilitation services provider, but will also make the Louisville, K.y.-based company’s Kindred at Home the largest home health and hospice organization in the U.S., serving more than one million patients per year across 47 states.
With 109,000 individuals employed, Thursday’s transaction makes the combined entity the fourth largest healthcare employer in the country.
“Together we will create the industry leading provider of home based patient-centered care, solidifying our position at the forefront of the care delivery model that is preferred by patients and payors. As a combined company, we will continue to grow and help shape the American Healthcare Delivery System,” stated Benjamin Breier, Kindred’s COO.
As a result of the deal, the combined companies stand to have annual revenues of approximately $7.1 billion and operating income of $1 billion, according to Kindred’s presentation on the merger agreement.
“By combining Gentiva and Kindred, we have solidified the importance of home care in the post-acute care continuum of tomorrow. Kindred and Gentiva will create the largest provider of Integrated Care in America,” stated Gentiva CEO Tony Strange. “The combined company has tremendous growth potential and will give Gentiva employees greater opportunities in the future. We look forward to working together with Kindred to ensure a seamless transition.”
Kindred and Gentiva expect the $1.8 billion transaction to close in the first quarter of 2015.
Written by Jason Oliva