Kindred Healthcare on Tuesday confirmed media reports of a sale that had begun just days earlier, announcing that its board had agreed to sell the company to a consortium of three companies — health insurer Humana and equity firms TPG Capital and Welsh, Carson, Anderson & Stowe — for approximately $4.1 billion in cash, including the assumption or repayment of net debt.
The transaction is expected to close this summer.
Under the terms of the deal, Kindred stockholders will receive $9 in cash for each share of Kindred common stock they hold, a 27% premium over Kindred’s 90-day volume weighted average price for the period ending Dec. 15, which was the last trading day before the Wall Street Journal first reported the potential transaction.
When the transaction is finalized, the home health, hospice and community care businesses will be separated from Kindred Healthcare and will be operated as a standalone company called Kindred at Home. This company will be owned 40% by Humana and 60% by TPG and WCAS. Humana will have a right to buy the remaining ownership interest in Kindred at Home over time.
Kindred’s long-term acute care hospitals, inpatient rehabilitation facilities and contract rehabilitation services businesses will be operated as a separate specialty hospital company using the name Kindred Healthcare; this company will be owned by TPG and WCAS. Kindred Healthcare will continue to provide certain support functions to Kindred at Home for a transitional period.
Current Kindred Healthcare President and CEO Benjamin A. Breier will become CEO of Kindred Healthcare, and David Causby, currently executive vice president and president of Kindred at Home, will become CEO of Kindred at Home.
Breier said the agreement “concludes a robust strategic review” and will lead to improved care for those living at home and enhanced access and reduced costs for those 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,” he added.
Debra A. Cafaro, chairman and CEO of Ventas, said the real estate investment trust supports the transaction. Ventas owns 30 long-term acute care and inpatient rehabilitation facilities operated by Kindred.
“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,” she said.