Humana’s $4.1 Billion Acquisition of 40% Interest in Kindred’s Homecare Business

Morgan Stanley & Co. LLC is acting as lead financial advisor to Humana and the Sponsors. JPMorgan Chase is also acting as lead financial advisor to the Sponsors. 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.

Humana Inc. (NYSE: HUM) has signed a definitive agreement to acquire a 40 percent minority interest in the Kindred at Home Division (Kindred at Home) of Kindred Healthcare, Inc. (NYSE: KND), the nation’s largest home health provider and second largest hospice operator, for estimated cash consideration of approximately $800 million, including Humana’s share of transaction and related expenses to facilitate a complete separation from the Long Term Acute Care and Rehabilitation businesses (the Specialty Hospital company). The transaction and related expenses include, among other costs, bond breakage fees, the extinguishment of certain legacy liabilities, the acceleration of certain stock awards, and advisory fees and expenses. The implied enterprise value of Kindred at Home is $3.15 billion before these expenses.

Humana believes that a key component of the next generation of its integrated care delivery model is the ability to provide care to consumers, including Humana members, in their home, meeting them where they want to be, in a preferred lower cost setting. This transaction will help Humana manage the chronic conditions of its members and others it serves and provide an additional avenue for the company to address activities of daily living, medication adherence and other health determinants, reinforcing its commitment to managing health holistically, not episodically.

This transaction will provide the company with extensive geographic coverage, with approximately 65 percent overlap with Humana’s individual Medicare Advantage membership. In addition, the robust data sharing between Humana and Kindred at Home will yield improved analytics and predictive modeling, providing a transformative platform for the future to advance capabilities including remote monitoring, telehealth, and digital interactions with members and physicians. This technology, together with a collaborative advanced payment model, will arm clinicians with better information to close gaps in care and improve quality.

Fried Frank advised Humana with Brian T. Mangino (Picture) and Philip Richter and included corporate partners William J. Breslin, Stewart A. Kagan, Robert M. McLaughlin and Joshua Wechsler; executive compensation & ERISA partner Adam Kaminsky; real estate and litigation partner Janice Mac Avoy; tax partner Alan S. Kaden; corporate real estate special counsel Jessica H. Mayes; intellectual property and technology special counsel Amir R. Ghavi; corporate associates Christopher S. Celentano, Kendra Clark, Adam B. Cohen, Scott I. Golden, Alison McCormick, Jose R. Morales, Dave N. Rao, Ville Rauhala, and Adam J. Ross; environmental associate Mary Beth Phipps; executive compensation & ERISA associate Jaclyn I. Waters; intellectual property and technology associate Marli Sussman; litigation associate Justin J. Santolli; and tax associate Shane C. Hoffmann.

 

Involved fees earner: Brian Mangino – Fried Frank Harris Shriver & Jacobson; Philip Richter – Fried Frank Harris Shriver & Jacobson; William Breslin – Fried Frank Harris Shriver & Jacobson; Stewart Kagan – Fried Frank Harris Shriver & Jacobson; Robert McLaughlin – Fried Frank Harris Shriver & Jacobson; Joshua Wechsler – Fried Frank Harris Shriver & Jacobson; Christopher Celentano – Fried Frank Harris Shriver & Jacobson; Kendra Clark – Fried Frank Harris Shriver & Jacobson; Adam Cohen – Fried Frank Harris Shriver & Jacobson; Scott Golden – Fried Frank Harris Shriver & Jacobson; Alison McCormick – Fried Frank Harris Shriver & Jacobson; Jose Morales – Fried Frank Harris Shriver & Jacobson; Dave Rao – Fried Frank Harris Shriver & Jacobson; Ville Rauhala – Fried Frank Harris Shriver & Jacobson; Adam Ross – Fried Frank Harris Shriver & Jacobson; Adam Kaminsky – Fried Frank Harris Shriver & Jacobson; Jaclyn Waters – Fried Frank Harris Shriver & Jacobson; Janice Mac Avoy – Fried Frank Harris Shriver & Jacobson; Jessica Mayes – Fried Frank Harris Shriver & Jacobson; Alan Kaden – Fried Frank Harris Shriver & Jacobson; Shane Hoffmann – Fried Frank Harris Shriver & Jacobson; Amir Ghavi – Fried Frank Harris Shriver & Jacobson; Marli Sussman – Fried Frank Harris Shriver & Jacobson; Mary Beth Phipps – Fried Frank Harris Shriver & Jacobson; Justin Santolli – Fried Frank Harris Shriver & Jacobson;

Law Firms: Fried Frank Harris Shriver & Jacobson;

Clients: Humana Inc.;

 

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Author: Ambrogio Visconti