NEW YORK (The Deal) -- Kindred Healthcare (KND) is having another go at acquiring its reluctant target, Gentiva Health Services (GTIV) , by launching an all-cash tender offer to acquire all outstanding shares of the company's common stock for $14.50 per share.
Kindred, the largest post-acute care health services provider in the U.S., announced its renewed interest Monday after the market close.
The new bid is an all-cash offer for a total equity value of about $573 million, which comes to $1.7 billion when Gentiva's debt is added in. If Gentiva refuses, Kindred said it "intends to amend the offer to seek to purchase 14.9% of Gentiva's outstanding shares," thus overcoming Gentiva's poison pill by becoming its largest shareholder.
The 14.9% share purchase would cost Kindred about $80 million, according to an SEC filing.
Gentiva, of Atanta, is the nation's largest provider of home health and hospice services. Together, the two companies could create a comprehensive platform to develop the value- and risk-based service models that experts believe the Affordable Care Act will require.
That's why Louisville-based Kindred is champing at the bit to get control of the company. "We remain confident that uniting our two highly complementary businesses would create a unique platform for coordinated patient care and deliver compelling clinical, strategic and financial benefits for all stakeholders," Kindred chairman and CEO Paul Diaz said in a Monday conference call with investors.
Last month, Kindred took public a previously undisclosed, unsolicited bid to buy Gentiva after the Atlanta company turned down its cash and equity offer of $14 per share. Assuming Gentiva's debt would have pegged the deal at about $1.6 billion.
But Gentiva said the offer significantly undervalued the company and that its own strategic plan would create better value for its shareholders. A week later Gentiva adopted a shareholder rights program, or poison pill, with a 15% trigger in an attempt to guard against a hostile takeover by Kindred.
In response to the most recent offer, Gentiva has asked its shareholders to "take no action" but wait until its board has reviewed the proposal and made a recommendation, within 10 business days.
To help finance the new offer, Kindred is issuing a follow-on public offering of 9 million shares with an overallotment of 15%, to be priced Thursday after the New York Stock Exchange closes. Those funds would be used for acquisitions and to pay down existing debt, the company said.
Kindred turned to Citigroup for financial advice. Cleary Gottlieb Steen & Hamilton is acting as legal adviser. A Gibson, Dunn & Crutcher team led by partners Dennis Friedman and Barbara Becker are serving as special counsel to Kindred in its cash tender offer. The law firm also is serving as counsel to the underwriters in Kindred's equity offering, led by partners Andrew Fabens and Barbara Becker with associate Nicolas Dumont.
Gentiva is tapping Barclays and Edge Healthcare Partners as its financial advisers and Greenberg Traurig as its legal adviser.