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Kindred Healthcare Acquiring Gentiva Health Services

kindredFor a cash and stock deal valued at $719.6 million, Atlanta-based Gentiiva Health Services, Inc. (NASDAQ: GTIV) is being acquired by Kindred Healthcare, Inc. (NYSE: KND), this after earlier bids were rejected.

Approved by the Kindred’s board, Gentiva will receive $14.50 per share in cash, as well as $5 of common stock for each share. With the inclusion of assumed debt, the overall transaction has an estimated value of $1.8 billion.

Based on the announcement of an acquisition, mid-day trading for Kindred is up 5.12% to $20.75 per share and for Gentiva, stock rose 17.12% to $19.57 per share.

The newly combined company will become the country’s largest provider of home health, hospice, and rehabilitation services as well as long-term operator of acute care hospitals and inpatient rehabilitation facilities. As a result, the anticipated annual revenue will reach roughly $7.1 billion.

The joined companies will also serve over one million patients every year throughout 47 states and employ approximately 109,000 people, this according to a Kindred Healthcare spokesperson.

Executive Chairman of the Gentiva board, Rod Windley, emphasized that the company’s focus has always been on maximizing value of shareholders and ensuring future success of the business. CEO of Gentiva, Tony Strange, added that with this endeavor, the largest provider of integrated care in the United States will be created.

Initially, Kindred went public back in May, offering to purchase Gentiva for $14 per share but ultimately raising the bid to $14.50. However, both offers were declined. On May 13, one day prior to Kindred making its first public offer to buy Gentiva, the sale represented a 128% premium to Gentiva’s stock price.

Then in July, Gentiva reported receiving a competing bid from an unnamed party that valued the company stock at $17.25 per share.

Although Gentiva entertained the proposal, Kindred came back at that same time with an offer of $16 per share in cash in order to buy as much as 14.9% stake os Gentiva.

If that deal had gone through, Kindred would have become the largest shareholder of Gentiva but the bid would have dropped below the 15% limit imposed by the shareholder rights’ plan, a measure adopted by Gentiva when Kindred first began bidding.

Although there was some back and forth compromises, Kindred and Gentiva finally reached a deal. As part of the acquisition, operations will be based at the Kindred at-home division in Louisville, Kentucky although strong presence will be maintained in Gentiva’s region of Atlanta, Georgia.

According to Kindred Healthcare, the acquisition will add to the company’s earnings immediately, which excludes integration and transaction expenses. Although approved, the deal is not set to close until the first quarter of 2015 since stockholders of Gentiva still need to provide approval.

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