Kindred Ends Takeover Saga by Finalizing Gentiva Acquisition

Kindred Healthcare, Inc. on Tuesday finalized its acquisition of Gentiva Health Services, Inc., completing a $1.8 billion acquisition marked by hostile moves and countermoves.

The addition of Gentiva makes Kindred the largest home health and hospice operator in the country, as well as one of the largest post-acute providers, according to the company. With an eye toward this outcome, Kindred launched its hostile takeover bid for Gentiva in May. Gentiva’s board then introduced a so-called “poison pill” in the shareholder rights plan, in an effort to thwart the acquisition.

The plot thickened when a bidding war erupted, after an unnamed company began to compete with Kindred to acquire Gentiva. In October, Kindred and Gentiva agreed to merge.

Kindred expects to see $70 million in cost synergies, with $35 million in the first year. Once synergies are realized, the combination should be approximately $0.40 to $0.60 accretive to standalone earnings, Kindred estimates.

The deal also aligns with Kindred’s ongoing strategy of shedding skilled nursing facilities while adding services elsewhere on the post-acute spectrum, company leaders have noted. By diversifying across the entire continuum of care, Kindred hopes to be an attractive partner for accountable care organizations and other provider networks that are striving for more coordinated care, in part due to reimbursement incentives under the Affordable Care Act.

“Today, Kindred is positioned to deliver patient-centered, coordinated care—from hospital to home—through an integrated model that improves quality, clinical outcomes and patient satisfaction in a cost-effective manner,” Chief Executive Officer Paul J. Diaz stated in a press release issued Tuesday.

Gentiva shareholders will receive $14.50 per share in cash, as well as 0.257 shares of Kindred common stock per an agreed-upon fixed exchange ratio.

Written by Tim Mullaney