Humana Inc.is teaming with two private equity firms to acquire and subsequently split up Kindred Healthcare Inc., the companies said on Tuesday, in a deal with an enterprise value of about $4.1 billion.
As per the terms of the agreement, Kindred stockholders will receive $9.00 in cash for each share of Kindred common stock they hold, representing a premium of about 27 percent to Kindred's 90-day volume weighted average price ("VWAP") for the period ending December 15, 2017, the last trading day prior to media reports regarding the potential transaction. (KND) said that it agreed to be acquired by a consortium, which consists of TPG Capital; Welsh, Carson, Anderson & Stowe; and Humana Inc.
"The acquisition of a minority interest in Kindred at Home, the largest home health company in the country with significant overlap with Humana membership, brings to us an experienced, well-respected home health provider with robust access to extensive clinical capabilities that will allow us to accelerate our strategy to more deeply integrate with our members' lifestyles", said Bruce D. Broussard, Humana's President and Chief Executive Officer.
The deal will complement Humana at Home's existing care coordination services with Kindred at Home's providers and home health care expertise. Kindred at Home has 609 home health, hospice and non-medical home care sites of service.
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Humana, which already operates a home health business, said the deal will help it keep costs down, improve health and manage chronic conditions. "We look forward to completing this strategic transaction with TPG and WCAS".
As part of the deal, Kindred will spin off into two separate entities. The new company, called Kindred Healthcare, will include long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services businesses and will be "uniquely positioned to care for the most medically complex and rehab-intensive populations", Kindred President and CEO Benjamin Breier said in a statement.
Both Humana and Kindred at Home believe the transactions will close in the summer of 2018 following state and federal regulatory approvals.