Kindred shakes shareholder lawsuit, pushes forward with Humana deal

A Delaware court has denied a preliminary injunction sought by a top Kindred Healthcare shareholder to block a pending $4.1 billion deal with Humana, allowing the takeover to move forward.

The Delaware Court of Chancery dismissed the motion for injunction filed by hedge fund Brigade Capital Management at the beginning of the month, Kindred said in an announcement. However, the court stipulated that Kindred must open stockholder voting for five business days.

“We are pleased that the Court has denied all of the relief Brigade sought,” the company said in a statement. “As we have maintained, the Kindred Board of Directors acted in accordance with its fiduciary duties and in the best interests of all stockholders throughout the entirety of its 18-month-long process to maximize stockholder value. We continue to expect to complete the transaction this summer and look forward to providing Kindred’s stockholders with premium cash value for their investment.”

Brigade Capital issued a quick rebuttal in the lead-up to the vote which began Thursday morning, calling Kindred’s statement that the court denied all relief “misleading,” and urging stockholders to vote “no” on the proposed acquisition.

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Brigade has been critical of the deal, in which Humana and two private equity firms have agreed to buy the long-term care provider, arguing that the $9-per-share price is well below market value. The firm claims Kindred’s board never attempted to increase the price after the Centers for Medicare & Medicaid Services pulled back on a proposed rule that would have cut home health spending by $950 million, “a significant headwind that was in fact a basis for the buyer group to lower its bid.”

RELATED: Humana, pair of private equity firms will buy Kindred Healthcare for $4.1B

“We simply cannot get our heads around this fact,” Brigade said in a statement on Wednesday.

Humana, which will own a 40% stake in Kindred if the deal is approved, has said “robust data sharing” between the two companies will improve predictive modeling for home health patients and allow the insurer to leverage digital tools like remote monitoring and telehealth.