NEW YORK (The Deal) -- After initial rejections, Kindred Healthcare (KND) is taking public its unsolicited bid to buy home health and hospice service provider Gentiva Health Services (GTIV) for $1.6 billion, split evenly between cash and stock and including Gentiva debt.
Kindred also has offered to make the $14 per share bid all-cash. It represents a 64% premium over Gentiva's common stock closing price on May 14 and a total equity value of about $533 million. Assuming Gentiva's debt, brings the total to $1.6 billion.
Kindred is the largest post-acute care provider in the U.S., reporting first quarter revenue of $1.3 billion, a 2% increase over the year-ago quarter. The company's strategy includes a commitment to growing its Care Management division, which houses home health and hospice operations.
The parties traded letters over the past few weeks, with Kindred upping its initial offer and saying it would consider adding Gentiva representation to an expanded Kindred board of directors.
Atlanta-based Gentiva's board declined the revamped offer in a May 13 letter, stating that it "continues to believe that our long-term strategy as a stand-alone company will generate substantially more value to our shareholders."
Gentiva is the nation's largest provider of home health and hospice services. It reported revenue of $487.5 million for the first quarter, an increase of 17% over first quarter 2013, and is expecting net revenue of from $1.9 billion to $2.1 billion for 2014. It acquired private Harden Healthcare Holdings Inc. last September for about $409 million.
Kindred CEO Paul Diaz called the proposed merger a "compelling combination" that would "augment Kindred's platform for value-and risk-based models." The combined companies could create a "unique platform to 'Continue the Care' by delivering patient-centered care across the full hospital to outpatient facility to the patient's home," Diaz noted.
Post-acute care is one area of healthcare that is sorely in need of cost controls, observers say.
Louisville-based Kindred recently refinanced $2.25 billion in debt, some of which was used to help pay for its $1.3 billion purchase of RehabCare Group Inc. in 2011. Kindred also recently acquired its first accountable care organization, Silver State ACO in Las Vegas.
Kindred is turning to Citigroup Inc. for financial advice and Cleary Gottlieb Steen & Hamilton LLP for legal assistance.