Kindred Healthcare Inc. said Tuesday that it will be acquired by insurance giant Humana Inc. and two private-equity firms in a deal valuing the firm at $783.2 million.
Humana, together with TPG Capital and Welsh, Carson, Anderson & Stowe, will pay $9 a share for the home-health and hospice operator, representing a 4.7% premium from the last trading day before The Wall Street Journal reported the companies were in advanced talks. Including debt, Kindred said the deal is worth $4.1 billion.
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Shares in Kindred fell 5.3% to $9 in premarket trading. The stock has climbed 21% so far this year.
Upon closing of the deal, Kindred's home-health, hospice and community-care businesses will be separated and operated as a stand-alone company. The private-equity firms will own 60% of the company, and Humana will own 40%.
The Kindred deal comes on the heels of CVS Health Corp. reaching an agreement earlier this month to buy Aetna Inc. for $69 billion in cash and stock. Humana rival UnitedHealth Group has also been looking to purchase doctor groups, urgent-care clinics and surgery centers in a bid to combine insurance operations with other health-care businesses.
Kindred is the biggest home-health and hospice operator in the U.S. Its facilities business, meanwhile, includes around 77 long-term care hospitals and 19 rehabilitation hospitals.
Kindred's 2015 acquisition of Gentiva Health Services Inc. left the company with a heavy debt load, leading it to shed its nursing homes to improve its finances.
Humana, like Kindred based in Louisville, Ky., already has some home-health operations, and has said it wants to get deeper into that business as a way to better manage the health of its Medicare enrollees. The insurer has said it believes closer ties to home-health services and physicians will help it improve care and hold down costs.
Barclays and Guggenheim Securities are serving as financial advisers to Kindred. Morgan Stanley and JPMorgan Chase are acting as lead financial advisers to the consortium. Citi also is acting as financial adviser.
TripleTree LLC is acting as strategic and financial adviser to Humana. Evercore provided a fairness opinion to the board of directors of Humana.
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(END) Dow Jones Newswires
December 19, 2017 09:58 ET (14:58 GMT)