The new $17.25-per-share buyout offer from "a recognized owner,
operator and investor in the sector" is higher than Kindred's
hostile bid of $16 per share for a 14.9 percent stake in Gentiva.
The new offer, which Gentiva said was made on Thursday, values the
company at about $634.2 million based on the 36.8 million shares
outstanding as of March 7.
Gentiva's shares spiked as much as 12 percent to $17.35 in extended
trading, while Kindred's shares were mostly flat with their close of
$24.42 on Thursday.
"Unless this unnamed bidder, is able to create significant synergies
with Gentiva, as was the case with Kindred, in my opinion it is
over-paying for Gentiva's assets," Obsidian Research Group analyst
Toby Wann said.
Kindred, in pursuit of Gentiva's services to an aging U.S.
population, had said it would not consider raising its bid again
unless Gentiva agreed for discussions.
Kindred had also written to Gentiva expressing concern that the
company may be courting its peer, Amedisys Inc, while refusing to
discuss Kindred's offer.
Kindred was not immediately reachable for comment.
U.S. hospitals and providers of home healthcare services have been
hit hard by federal budget spending cuts and lower Medicare
insurance reimbursement rates.
Analysts, including Wann, have said Kindred and Gentiva together
would create a formidable post-acute care provider, a potentially
lucrative business as the U.S. population grows older.
"They are far better together, than they are as individual
entities," Wann said.
[to top of second column]
However, Gentiva on Thursday recommended its stockholders not to
tender their shares to Kindred's "coercive" offer, saying it
undervalued the company.
The new offer, which was accompanied by support letters from major
financial institutions, is based on publicly available information
and is subject to financing and due diligence, Gentiva said.
Kindred's stake would only be used as an "irritant" to distract
Gentiva or as a "potential impediment" to any alternative
transactions, Gentiva said. The 14.9 percent stake would make
Kindred Gentiva's largest single shareholder. Gentiva last month
adopted a "poison pill" with a trigger of 15 percent.
"A potential problem that Gentiva faces with the new bid, is the
poison-pill they implemented ... How will they get around that now,
for this new bidder?" said Wann.
Barclays and Edge Healthcare Partners are Gentiva's financial
advisers and Greenberg Traurig, LLP is its legal adviser.
(Editing by Savio D'Souza)
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