Kindred Healthcare, Inc. (NYSE:KND) Acquisition Clears Major Hurdle


A proposed takeover of Kindred Healthcare, Inc. (NYSE:KND)’s has cleared a major hurdle. The company’s shareholders have voted unanimously in favor of a takeover bid by Humana Inc. (NYSE:HUM) and private equity firms, TPG Capital and Welsh, Carson, Anderson & Stowe.

Acquisition Terms

The $4.1 billion deal which was first announced on December 19, 2017, should close before the summer. Under the terms of the agreement, the companies are to pay $9 in cash for each Kindred share, representing a 27% premium to Kindred’s 90-day weighted average price.

The trio have also agreed to assume Kindred’s debt made up of $3.3 billion of long-term debt and $1.03 billion that is due in a year.

“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. We look forward to completing the transaction in the coming months and delivering premium cash value to our stockholders,” said Kindred CEO, Benjamin A. Breier.

Once the transaction closes, Kindred is to be split into two; Kindred Healthcare and Kindred at Home. The two private equity firms are to own Kindred Healthcare and will operate its long-term acute-care hospitals, inpatient, and rehabilitation facilities.

Humana is to own 40% in Kindred at Home, tasked with the responsibility of operating its home health hospice and community care business. The private equity firms will own the remaining stakes. However, Humana intends to exercise an option in the agreement that allows it to gain full control of Kindred at Home.

Consolidation Spree

A move to acquire Kindred at Home is part of Humana push that seeks to strengthen its population health strategy, in a bid to keep patients out of hospitals and into lower-cost outpatient settings. Caregivers serve about 130,000 patients every day via Kindred at Home, allowing the unit to generate about $2.5 billion in annual revenue.

A deal for Kindred Healthcare was also triggered by the fact that rivals are increasingly forming closer ties with providers of medical care. CVS Health Corp (NYSE:CVS) is currently pushing to take over Aetna Inc. (NYSE:AET) as UnitedHealth Group Inc. (NYSE:UNH) continues to strengthen partnerships with medical care providers through its Optum Unit.


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