The board of Atlanta-based home health and hospice services provider Gentiva Health Services has turned down an unsolicited takeover offer from Kindred Healthcare, a post-acute care services provider based in Louisville, Ky.
Here are five things to know about the offer and Gentiva's decision to reject it.
1. Kindred originally extended the offer in May. The proposed acquisition would have involved Kindred acquiring all of the outstanding shares of Gentiva common stock for a combination of $7.00 per share cash and $7.00 of Kindred common stock. The post-acute care company also indicated it would change its offer to 100-percent cash if Gentiva's board preferred. The proposed price for Gentiva implied a total equity value of approximately $533 million.
2. If Gentiva had accepted the offer, Kindred would serve nearly 127,000 patients per day and operate in 47 states. "This compelling combination would unite two highly complementary businesses by joining Kindred's resources with Gentiva's home health and hospice capabilities," Kindred CEO Paul J. Diaz said in the news release detailing the offer.
3. However, Gentiva's board has unanimously decided to reject the offer. "After consulting with our financial and legal advisors, it is clear to the board that this offer is grossly inadequate and is not in the best interests of Gentiva stockholders," Rod Windley, executive chairman of Gentiva, said in a news release.
4. The following four factors, among others, are behind Gentiva's decision, according to the release.
- The offer would exploit a temporary decrease in Gentiva stock price.
- The offer "significantly undervalues" Gentiva.
- The offer would improve Kindred's operations at the expense of Gentiva stockholders.
- Gentiva's financial advisers, Barclays and Edge Healthcare Partners, have deemed the offer inadequate.
5. Kindred has disputed Gentiva's assessment of the offer. In a news release, Kindred CEO Paul J. Diaz said, "After reviewing Gentiva's recommendation, it remains clear that Kindred's offer would create immediate, certain and superior value for Gentiva shareholders. We call on the Gentiva board and management team to sit down and negotiate a transaction that would advance the interests of both companies' shareholders, employees and patients, as well as our country's healthcare delivery system. We also call on Gentiva shareholders to make their voices heard by tendering their shares in support of Kindred’s value enhancing offer."
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