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
LOUISVILLE, Ky.--(BUSINESS WIRE)--Dec. 19, 2017--
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.
Source: Kindred Healthcare, Inc.
For Kindred
Media
Susan E. Moss, (502) 596-7296
Kindred
Corporate Communications
or
Investors and Analysts
Todd
Flowers, (502) 596-6569
Kindred Investor Relations
or
For
Humana
Media
Tom Noland, (502) 580-3674
Humana
Corporate Communications
tnoland@humana.com
or
Investors
and Analysts
Amy Smith, (502) 580-2811
Humana Investor
Relations
amysmith@humana.com
or
For
TPG
Luke Barrett, (415) 743-1550
media@tpg.com
or
For
WCAS
Jon Rather, (212) 893-9570
General Partner
jrather@wcas.com