Thursday, July 17, 2014

Gentiva's White Knight an LBO?


Gentiva's board leaked news of a White Knight offer:

The Board said it has received today a proposal from a recognized owner, operator and investor in the sector to acquire all of the outstanding shares of Gentiva common stock for $17.25 per share in cash (the "Alternative Proposal"). The Alternative Proposal is based on publicly available information and is subject to financing and due diligence, as well as final internal approvals and the execution of a definitive transaction agreement. The Board will review the Alternative Proposal carefully, in consultation with its financial and legal advisors, in due course. The Alternative Proposal was accompanied by support letters from major financial institutions, subject to customary conditions.
Is the sector as broad as healthcare or as specific as home health and hospice?  Gentiva purchased Harden from Capstar Partners, a leveraged buyout organization (LBO).  Will Capstar open wide and swallow Gentiva?

LBO's have a huge presence in healthcare.  KKR owned, operated and invested in HCA.  They also are the largest holder of Amedisys, recently rumored to be in merger talks with Gentiva.

Welsh, Carson, Anderson and Stowe consider healthcare their specialty niche.  The Carlyle Group owned two post acute care providers, ManorCare and LifeCare.  LifeCare sank under the stress of government reimbursement changes.

Mario Gabelli's hedge fund loaded up on Gentiva stock, but Gabelli does not promote himself as a health care operator.  He won't complain about a big payday courtesy of a leveraged deal.

Gentiva's board is yet to reveal the man or firm behind the White Knight offer but KKR would seem to be most likely candidate, based on what little information is available.

It's important to know which LBO firm is interested in order to assess the likelihood of their closing any deal.  Financing has been plentiful and dirt cheap for corporate deals.

Recall how cheap money caused homeowners to overbuy before the financial crisis.  It may result in a LBO firm overpaying for Gentiva.  The Gentiva board moved their knight, hinting that he's a greedy SOB. 

The testosterone meter read correctly.  It's Kindred's move in the brawl for control of Gentiva.  Doesn't this just warm the hospice heart?  

Anonymous (from Gentiva)

1 comment:

  1. Kindred isn't rated much higher than gentiva on Glassdoor. Capstar's board members are on gentiva's board (the Hicks bros, Ben Hanson...I can't remember who else), and honestly they screwed up the acquisition of Voyager, probably for the same reasons, and those are the sites being investigated for fraud.

    Regardless of who the buyer is, as an employee or associate, or whatever they want to call us (slaves has a nice ring to it), brace yourself for more of the same.

    We are wholly dispensable to them. They'll pay us enough to keep us, maybe, we'll work hard enough to not get fired. It's the corporate model.