Kindred Healthcare Inc. has increased its hostile offer for Gentiva Health Services Inc. to $16 a share as it seeks to force a deal with the home health-care and hospice company.
Kindred, based in Louisville, Kentucky, is seeking 14.9 percent of Atlanta-based Gentiva’s shares, the most it can buy before triggering a “poison pill” takeover defense. The new proposal, worth $88 million, follows a June offer of $14.50 a share that was worth $573 million.
Kindred, a provider of long-term medical care, will walk away if the new proposal isn’t successful in forcing talks, said Chief Executive Officer Paul Diaz. Gentiva turned down an offer announced May 15 of $14 a share, or about $533 million.
“If the Gentiva board remains unwilling to commence discussions, we will turn our attention toward these other avenues for value creation,” Diaz said in a statement.
Gentiva shares rose 2.5 percent to $16.21 at 4 p.m. in New York. Kindred shares rose 1.5 percent to $24.74.
Gentiva has implemented a defense designed to keep any one holder from gaining more than 15 percent of its stock. A Gentiva spokesman declined to comment.
“It will be extremely difficult for Gentiva not to come to the table,” said Chris Rigg, an analyst with Susquehanna International Group LLP, in a July 14 note to clients. In conversations with Kindred’s management, an offer of $18 to $20 per share suggested by Gentiva would be “unrealistic in the absence of due diligence,” Rigg wrote.
An acquisition would grow Kindred’s elder-care business as the number of people older than 65 expected to double to 21 percent of the U.S. population, Diaz said in May.
Kindred would add Gentiva’s 500 facilities for home health, hospice and community care service to Kindred’s more than 2,000 post-acute facilities in hospitals, nursing centers and rehabilitation centers.
Citigroup Inc. is acting as financial adviser to Kindred, and Cleary Gottlieb Steen & Hamilton LLP is acting as legal adviser. Gentiva has said it has retained Greenberg Traurig LLP as its legal adviser and Barclays Plc and Edge Healthcare Partners LLC as its financial advisers.