Shareholder Opposition Unlikely to Derail Kindred Deal

Posted on Monday, January 8, 2018 1:54 PM

Brigade Capital, who owns a 5.8% stake in Kindred said it would vote against the deal under the current terms in a letter dated December 27, 2017.   “The deal splits Kindred into two businesses. Humana, along with private equity firms TPG Capital, Welsh, Carson, Anderson & Stowe, would own Kindred’s home health care, hospice and community-based business, Kindred at Home. Kindred’s rehabilitation and hospital business will be owned by the private equity groups.

The deal is worth an estimated $4.1 billion and values Kindred’s common stock at $9 per share, approximately a 27% premiumto Kindred’s 90-day volume weighted average price at the time of the announcement.”

Brigade Capital feels that the valuation was too low based on the company’s positive outlook and earnings power going forward.  While the letter contains strong opposition, it does not mention any forthcoming legal action.  Humana has not responded to the letter.

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