Sunday, September 7, 2014
Gentiva Insiders to Sell All at Once?
The looming sale of Gentiva to Kindred or an anonymous investor will give insiders the chance to profit handsomely from their stock holdings. Investors expect the impending deal to come in higher than $17,25 per share, the last publicly shared bid by both parties.
Kindred would jettison much of Gentiva's senior management team to achieve cost savings, which explains the cold shoulder CEO Tony Strange and the board have given Kindred since its first paltry offer of $13. I assume the anonymous investor would keep Gentiva's management team in place. For this reason insiders are cheering for the white knight.
In this scenario senior leaders and board members could roll their equity into the deal, effectively becoming part owners with the anonymous investor. If not, they'll have a big payday, get to keep their jobs and have a chance to earn an equity stake in the new company, which I assume will be private.
Gentiva is already highly leveraged, having overpaid and over borrowed for both Odyssey and Harden. "Due diligence" means conversations with senior management on making the deal work for the buyer. How much additional debt will Gentiva be saddled with? How much will the company's interest expense increase? Will the buyer charge the company millions in deal fees and annual management fees?
Money to pay interest and fees will need to come from somewhere. That means more operational cuts for home health agencies and hospices (as if there already hadn't been enough). Anyone hurt by Gentiva leaders' polishing the company for maximum sale price should give our leaders the feedback they deserve. Comments anyone on the state of leadership at Gentiva?
Anonymous (from Gentiva)