Thursday, August 21, 2014
Gentiva Winner Should be Revealed by Ides of September
Two bidders remain for Gentiva, Kindred and an unnamed investment firm. They are in due diligence at the moment sharpening their pencils for a possible higher bid. Benzinga reports that Kindred may have the upper hand.
They suggest the unnamed investment firm is Formation Capital. owner of long term care provider Genesis. Genesis is in the process of merging with Skilled Healthcare in a stock only deal. Benzinga's story believes this stock deal would consume Formation Capital's time and resources, making it more likely Kindred will win Gentiva.
A stock for stock deal doesn't seem complex. It does not require arranging any debt to fund the combination. It's more like a merger than an acquisition.
Formation Capital has five unrealized affiliates, all in the post acute health care space. Formation does not need to combine Gentiva with Genesis. It could acquire Gentiva and keep it a stand alone company. It could roll in its existing hospice and home health companies, LifeChoice Hospice (seven hospices) and Millenium Home Health (twelve home healths), which have nothing to do with Genesis.
Gentiva considered calling its higher interest debt in September 2014 and arranging lower rate financing. It wanted to acquire other businesses in the hospice, home health and community care space. Conceivably, Gentiva could remain a wholly owned Formation affiliate and fulfill this previously stated vision.
What if the unnamed investment firm is not Alpharetta based Formation Capital? That means its back to the bidder with the deepest pocketbook and ability to raise debt.
Gentiva senior leaders would love to be acquired by an investor that believes in them and their vision. That sole criteria would give the unnamed investor an upper hand in the Gentiva boardroom. The Ides of September should reveal Gentiva's winner. Expect lots of silence until then.
Anonymous (from Gentiva)