Transaction Valued at Approximately $4.1
Billion; 27 Percent Premium to 90-Day VWAP
Transaction Will Result in Two Separate
Companies
Kindred at Home Will Enhance Access to Care
and Reduce Costs for People Living with Chronic Conditions
Specialty Hospital Company Is Uniquely
Positioned to Care for the Most Medically-Complex and
Rehab-Intensive Populations
Kindred Healthcare, Inc. (“Kindred” or “the Company”) (NYSE:KND)
today announced that its Board of Directors has approved a
definitive agreement under which it will be acquired by a
consortium of three companies: TPG Capital (“TPG”), Welsh, Carson,
Anderson & Stowe (“WCAS”) and Humana Inc. (“Humana”) (NYSE:
HUM) (together, the “consortium”) for approximately $4.1 billion in
cash including the assumption or repayment of net debt.
Under 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 approximately 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.
Kindred operates home health, hospice and community care
businesses, long-term acute care (“LTAC”) hospitals, inpatient
rehabilitation facilities (“IRF”) and a contract rehabilitation
services business. Immediately following the acquisition of
Kindred, the home health, hospice and community care businesses
will be separated from Kindred and operated as a standalone company
owned 40 percent by Humana, with the remaining 60 percent owned by
TPG and WCAS (“Kindred at Home”). Humana will have a right to buy
the remaining ownership interest in Kindred at Home over time
through a put/call arrangement. Kindred’s LTAC hospitals, IRFs and
contract rehabilitation services businesses will be operated as a
separate specialty hospital company owned by TPG and WCAS (“Kindred
Healthcare”).
Benjamin A. Breier, President and Chief Executive Officer of
Kindred, said, “We are pleased to have reached this agreement,
which will deliver significant cash value to Kindred’s stockholders
and concludes a robust strategic review undertaken by the Board and
management team over the course of 2017. We believe this agreement
maximizes value for stockholders and represents a significant step
forward in transforming home healthcare in America by enhancing
access to care and reducing costs for people living with chronic
conditions. In addition, the specialty hospital company, Kindred
Healthcare, will be uniquely positioned to care for the most
medically-complex and rehab-intensive populations.”
Continued Mr. Breier, “The flexibility and resources gained
through the investments by Humana, TPG and WCAS are expected to
enhance innovation in both platforms, further our culture of a
patient-first approach to high-quality, compassionate care and
create new opportunities for Kindred employees.”
Bruce D. Broussard, Humana’s President and Chief Executive
Officer, said, “Humana is focused on enhancing our capabilities for
care in the home to prioritize patient wellness while delivering
high-quality care in a low-cost setting. This transaction with
Kindred underscores the successful and ongoing execution of our
strategy by joining with the most geographically diverse home
healthcare provider in the country. We are confident that these new
capabilities will help Humana continue to modernize home health and
meaningfully improve the member and provider experience. We look
forward to completing this strategic transaction with TPG and
WCAS.”
“TPG’s healthcare team has a long history of partnering with
companies and management teams that hold significant growth
potential,” said Jeff Rhodes, Partner at TPG. “We believe this
transaction will provide Kindred with additional resources and
focus to drive significant value for all stakeholders. We look
forward to partnering with Humana, WCAS and the management team at
Kindred to build on the complementary capabilities this transaction
brings together. We are excited to build the new companies and
invest behind best in class clinical care.”
D. Scott Mackesy, WCAS’s Managing Partner, said, “WCAS’s
healthcare franchise has been built around partnering with
excellent management teams and providing incremental resources to
drive above market growth. We have a long history of creative
dealmaking with corporate partners and look forward to working with
Humana, TPG and Kindred’s management team to deliver the highest
quality, most cost-efficient healthcare to all.”
Debra A. Cafaro, Chairman and Chief Executive Officer of Ventas,
Inc. (“Ventas”) (NYSE: VTR), said, “As the premier capital provider
for leading healthcare companies and long-standing partners to
Kindred, we are delighted to support Kindred and this transaction.
It creates the nation’s foremost LTAC, IRF and contract
rehabilitation services operator with improved financial strength.
The specialty hospital company, Kindred Healthcare, brings together
Kindred’s outstanding management team as well as experienced
private equity partners with strong healthcare backgrounds. We look
forward to deepening our partnership with Kindred’s sponsors and
building on the strong relationship we have developed with Kindred
over many years to continue transforming care for the aging
population.”
Leadership and Shared Services
Upon completing the transaction, Mr. Breier will serve as Chief
Executive Officer of the specialty hospital company, Kindred
Healthcare. David Causby, currently Executive Vice President and
President of Kindred at Home, will serve as Chief Executive Officer
of Kindred at Home.
Under a shared services agreement, Kindred Healthcare will
continue to provide certain support functions to Kindred at Home
for a transitional period.
Timing and Approvals
The agreement is subject to certain conditions to closing,
including, without limitation, the approval of the agreement by the
stockholders of Kindred, the receipt of certain licensure and
regulatory approvals, the expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended, and other customary closing conditions.
The transaction is expected to close during the summer of
2018.
Advisors
Barclays and Guggenheim Securities, LLC are serving as financial
advisors to Kindred and Cleary Gottlieb Steen & Hamilton LLP is
serving as legal counsel.
Morgan Stanley & Co. LLC and JPMorgan Chase are acting as
lead financial advisors to the consortium. Citi is also acting as
financial advisor. Debevoise & Plimpton LLP and Mintz Levin are
serving as legal counsel to the consortium. Ropes & Gray LLP is
serving as legal counsel to WCAS.
TripleTree, LLC is acting as strategic and financial advisor to
Humana. Evercore provided a fairness opinion to the Board of
Directors of Humana. Fried, Frank, Harris, Shriver & Jacobson
LLP is acting as legal advisor to Humana.
About Kindred
Kindred Healthcare, Inc., a top-105 private employer in the
United States, is a FORTUNE 500 healthcare services company based
in Louisville, Kentucky with annual revenues of approximately $6.1
billion1. At September 30, 2017, Kindred’s continuing
operations, through its subsidiaries, had approximately 86,400
employees providing healthcare services in 2,475 locations in 45
states, including 77 LTAC hospitals, 19 inpatient rehabilitation
hospitals, 16 sub-acute units, 609 Kindred at Home home health,
hospice and non-medical home care sites of service, 101 inpatient
rehabilitation units (hospital-based) and contract rehabilitation
service businesses which served 1,653 non-affiliated sites of
service. Ranked as one of Fortune magazine’s Most Admired
Healthcare Companies for eight years, Kindred’s mission is to
promote healing, provide hope, preserve dignity and produce value
for each patient, resident, family member, customer, employee and
shareholder we serve. For more information, go to
www.kindredhealthcare.com. You can also follow us on Twitter and
Facebook.
About Humana
Humana Inc. is committed to helping our millions of medical and
specialty members achieve their best health. Our successful history
in care delivery and health plan administration is helping us
create a new kind of integrated care with the power to improve
health and well-being and lower costs. Our efforts are leading to a
better quality of life for people with Medicare, families,
individuals, military service personnel, and communities at
large.
To accomplish that, we support physicians and other health care
professionals as they work to deliver the right care in the right
place for their patients, our members. Our range of clinical
capabilities, resources and tools – such as in-home care,
behavioral health, pharmacy services, data analytics and wellness
solutions – combine to produce a simplified experience that makes
health care easier to navigate and more effective.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s website at humana.com,
including copies of:
- Annual reports to stockholders;
- Securities and Exchange Commission
filings;
- Most recent investor conference
presentations;
- Quarterly earnings news releases and
conference calls;
- Calendar of events; and
- Corporate Governance information.
About TPG
TPG is a leading global alternative asset firm founded in 1992
with more than $73 billion of assets under management and offices
in Austin, Beijing, Boston, Dallas, Fort Worth, Hong Kong, Houston,
London, Luxembourg, Melbourne, Moscow, Mumbai, New York, San
Francisco, Seoul, and Singapore. TPG’s investment platforms are
across a wide range of asset classes, including private equity,
growth venture, real estate, credit, and public equity. TPG aims to
build dynamic products and options for its investors while also
instituting discipline and operational excellence across the
investment strategy and performance of its portfolio. For more
information, visit www.tpg.com.
About WCAS
WCAS focuses its investment activity in two target industries:
technology and healthcare. Since its founding in 1979, WCAS has
organized 16 limited partnerships with total capital of over $22
billion. The Firm is currently investing an equity fund, Welsh,
Carson, Anderson and Stowe XII, L.P., which closed on over $3.3
billion in commitments. WCAS has a current portfolio of
approximately twenty companies with 2017 annual revenues totaling
over $16 billion. WCAS’s strategy is to partner with outstanding
management teams and build value for its investors through a
combination of operational improvements, internal growth
initiatives and strategic acquisitions. See www.wcas.com to learn
more.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are often identified by
words such as “anticipate,” “approximate,” “believe,” “plan,”
“estimate,” “expect,” “project,” “could,” “would,” “should,”
“will,” “intend,” “hope,” “may,” “potential,” “upside,” and other
similar expressions.
Such forward-looking statements are inherently uncertain, and
stockholders and other potential investors must recognize that
actual results may differ materially from Kindred’s expectations as
a result of a variety of factors. Such forward-looking statements
are based upon management’s current expectations and include known
and unknown risks, uncertainties and other factors, many of which
Kindred is unable to predict or control, that may cause Kindred’s
actual results, performance, or plans to differ materially from any
future results, performance or plans expressed or implied by such
forward-looking statements. Risks and uncertainties related to the
proposed transactions include, but are not limited to, the
occurrence of any event, change or other circumstance that could
give rise to the termination of the merger agreement; the failure
of the parties to satisfy conditions to completion of the proposed
merger, including the failure of Kindred’s stockholders to approve
the proposed merger or the failure of the parties to obtain
required regulatory approvals; the risk that regulatory or other
approvals are delayed or are subject to terms and conditions that
are not anticipated; changes in the business or operating prospects
of Kindred or its homecare business or hospital business; changes
in healthcare and other laws and regulations; the impact of the
announcement of, or failure to complete, the proposed merger on our
relationships with employees, customers, vendors and other business
partners; and potential or actual litigation. In addition, these
statements involve risks, uncertainties, and other factors detailed
from time to time in Kindred’s Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
filed with the Securities and Exchange Commission (the “SEC”).
Many of these factors are beyond Kindred’s control. Kindred
cautions investors that any forward-looking statements made by
Kindred are not guarantees of future performance. Kindred disclaims
any obligation to update any such factors or to announce publicly
the results of any revisions to any of the forward-looking
statements to reflect future events or developments.
Additional Information and Where to Find It
Kindred will file with the SEC and mail to its stockholders a
proxy statement in connection with the proposed merger. We urge
investors and security holders to read the proxy statement when it
becomes available because it will contain important information
regarding the proposed merger. You may obtain a free copy of the
proxy statement (when available) and other related documents filed
by Kindred with the SEC at the SEC’s website at www.sec.gov. You
also may obtain the proxy statement (when it is available) and
other documents filed by Kindred with the SEC relating to the
proposed merger for free by accessing Kindred’s website at
www.kindredhealthcare.com by clicking on the link for “Investors”,
then clicking on the link for “SEC Filings.”
Participants in the Solicitation
Kindred and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from Kindred’s
stockholders in connection with the proposed merger. Information
regarding the interests of these directors and executive officers
in the proposed merger will be included in the proxy statement when
it is filed with the SEC. You may find additional information about
Kindred’s directors and executive officers in Kindred’s proxy
statement for its 2017 Annual Meeting of Stockholders, which was
filed with the SEC on May 25, 2017. You can obtain free copies of
these documents from Kindred using the contact information
above.
1 Revenues from continuing operations for the last twelve months
ended September 30, 2017.
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version on businesswire.com: http://www.businesswire.com/news/home/20171219005618/en/
For KindredMediaSusan E. Moss, (502)
596-7296Kindred Corporate CommunicationsorInvestors and
AnalystsTodd Flowers, (502) 596-6569Kindred Investor
RelationsorFor HumanaMediaTom Noland, (502)
580-3674Humana Corporate
Communicationstnoland@humana.comorInvestors and AnalystsAmy
Smith, (502) 580-2811Humana Investor
Relationsamysmith@humana.comorFor TPGLuke Barrett, (415)
743-1550media@tpg.comorFor WCASJon Rather, (212)
893-9570General Partnerjrather@wcas.com
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