Gentiva Shares Up 11% On Alternative Offer; Rejects Kindred Offer

(RTTNews) - Home health and hospice services provider Gentiva Health Services, Inc.'s (GTIV) board again rejected a sweetened $16 per share offer from healthcare services provider Kindred Healthcare, Inc. (KND) to acquire 14.9 percent of its outstanding shares to become its largest shareholder. Gentiva's board recommended its shareholders not to tender their shares into Kindred's partial offer.

"Regarding Kindred's amended partial Offer, the Board concluded based on thorough analysis that it still leaves a significant gap between the true value of Gentiva and the consideration being offered and is not in the best interests of Gentiva stockholders," Gentiva Executive Chairman Rod Windley said in a statement.

Atlanta, Georgia-based Gentiva said its board's unanimous decision comes after careful consideration and consultation with its financial and legal advisors. It said the offer significantly undervalues Gentiva's shares, as well as is coercive and not in the best interests of Gentiva stockholders.

Gentiva added that it has received an alternative proposal earlier in the day from "a recognized owner, operator and investor in the sector" to acquire the whole of Gentiva for $17.25 per share in cash. Gentiva shares surged nearly 11 percent in extended trading following the receipt of the offer.

The alternative offer represents a 102 percent premium over Gentiva's unaffected closing price of $8.54 on May 14, the last trading day prior to the Kindred's public offer.

The alternative proposal, which included support letters from major financial institutions, is subject to financing and due diligence, as well as final internal approvals and the execution of a definitive transaction agreement.

Gentiva board said it will review the alternative proposal carefully, in consultation with its financial and legal advisors, in due course.

"In the Board's view, the stake Kindred hopes to acquire would only be used as an irritant designed to distract Gentiva from executing on its value-creating strategic plan or a potential impediment to any alternative transactions that the Board may believe to be in the best interests of Gentiva stockholders," Winddley added.

Louisville, Kentucky-based Kindred had initially in mid-May proposed to acquire the whole of Gentiva for $14 per share in a cash and stock deal valued at about $533 million. The consideration included $7.00 per share in cash and $7.00 of Kindred common stock, valued at about $1.6 billion, including assumed debt. The offer represented a 64 percent premium.

This offer was made directly to shareholders after successive, non-binding proposals of April 14 and May 5 made to its executive chairman and CEO were rejected. Gentiva spurned the deal, stating that it undervalues the company and went ahead with a poison pill to thwart any takeover.

With the poison pill in place, Kindred in mid-June then sweetened and amended its hostile offer, proposing to buy only a 14.9 percent stake in Gentiva for $14.50 a share to become its largest shareholder, which was sweetened to $16.0 per share earlier in the week. The proposed stake was the maximum possible without triggering the poison pill threshold of 15 percent.

GTIV closed Thursday's regular trading session at $15.47, down $0.52 or 3.25% on a volume of 0.51 million shares. However, the stock surged $1.69 or 10.92% in after-hours trading. KND closed at $24.42, down $0.35 or 1.41% on a volume of 0.32 million shares.