Major Kindred Shareholder Brigade Capital Sues to Block Acquisition
As the acquisition of Kindred Healthcare’s (NYSE: KND) home health care business proceeds, one major shareholder is ramping up its fight against the deal.
Brigade Capital, a New York-based private equity firm with a 5.8% stake in Kindred, has filed a lawsuit to stop the planned acquisition.
The lawsuit, which seeks to stop the merger or collect damages if it goes forward, marks an escalation from Brigade’s previous outcry over the deal; the firm protested the $9 acquisition share price for Kindred, calling it “inadequate.” Brigade delivered a letter to Kindred’s board of directors shortly after insurance giant Humana (NYSE: HUM) and private equity groups TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS) announced their $4.1 billion acquisition of Kindred at Home in December.
Kindred, based in Louisville, Kentucky, is the nation’s largest home health care provider and also has a significant hospital and rehabilitation business that will be separated from the home health business in the deal.
The Brigade complaint alleges that Kindred and its board members breached their fiduciary duty by failing to conduct an independent value-maximizing sales process and omitted material information in is definitive proxy statement filed on February 21, 2018, according to another Kindred filing. The complaint seeks to prohibit the stockholder vote to approve the merger and from the defendants from taking any further action to consummate the transaction, and attorneys’ fees.
Kindred has since issued a response, with an updated proxy statement on the deal to quell the dissatisfaction of some shareholders, and denied the allegations in the complaint. The company has scheduled a vote on the deal with shareholders on March 29, 2018.
Written by Amy Baxter