Kindred Shareholders Approve Acquisition by Humana, PE Firms

Kindred Healthcare (NYSE: KND) shareholders approved the sale of the company’s home health and hospice business to insurance giant Humana (NYSE: HUM) and two private equity groups.

The approval comes after some contention among shareholders. One investor with a 5.8% stake in Louisville-based Kindred, Brigade Capital, sued to block the merger. The suit was dismissed by a judge in March, but the court ruled the voting period had to remain open for five business days for stockholders to seek appraisal for their stocks if they desired. The voting concluded April 5.

Under terms of the deal, Humana is acquiring 40% of Kindred at Home’s business, with TPG Capital and Welsh, Carson, Anderson & Stowe (WCSA) acquiring the remaining 60%. The deal, which is expected to close in the summer of 2018, also separates Kindred’s hospital and rehabilitation business from the Kindred at Home branch. The total transaction is approximately $4.1 billion in cash.

Kindred’s share price is set at $9 in the transaction—a figure Brigade called “inadequate.” The firm also claimed that Kindred’s executives were acting out of self-interest, and that improving market and regulatory conditions will eventually boost the company’s value beyond what the buyers are offering. Kindred executives argued in favor of the deal, citing substantial headwinds and ongoing uncertainty in the home health sector.

The company’s share price hovered just above $8.90 as of mid-day trading on Thursday.

“We are pleased that the transaction with the consortium received the broad support of our stockholders in recognition of the robust process undertaken by the board to achieve maximum value,” Kindred CEO and President Benjamin Breier said in a statement. “We look forward to completing the transaction in the coming months and delivering premium cash value to our stockholders.”

Barclays and Guggenheim Securities, LLC are serving as financial advisors to Kindred, and Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel.

Written by Amy Baxter