Kindred Healthcare to be bought by Humana, PE firms in $4.1B deal

Dec 19 (Reuters) - U.S. health insurer Humana Inc (NYSE:HUM) and two private equity firms agreed to buy home healthcare and long-term care operator Kindred Healthcare Inc (NYSE:KND) on Tuesday for about $782 million, the latest expansion by an American health insurer into patient care.

Humana, TPG Capital and Welsh, Carson, Anderson & Stowe will pay $9 per share in cash. They said that, with debt and other costs, they are paying about $4 billion for the company.

The companies plan to split Kindred into two separate companies: a larger one that focuses on home healthcare and the other focused on long-term acute care and rehabilitation.

Humana, the fourth largest U.S. health insurer, will pay $800 million in cash for Kindred shares and to cover other costs. That will give it a 40 percent stake in Kindred at Home, which will employ the 40,000 Kindred caregivers who serve about 130,000 patients daily. It will not have a stake in the second Kindred unit.

Humana's insurance business is focused on individuals in the U.S. government's Medicare program for the elderly and disabled. The acquisition builds on Humana's focus on using health providers in members' homes to improve health outcomes and save costs.

The deal comes after competitors Aetna Inc. and UnitedHealth Group Inc announced deals that will expand the reach of those insurers into healthcare services in locations and sites that charge less than hospitals.

Soaring healthcare costs have been a national issue, and the federal government has been restricting its spending for health, putting pressure on insurers.

Wall Street analysts said the Kindred deal, which had been reported on Sunday based on unnamed sources, would not end speculation that Humana itself could be a takeover target in the current healthcare consolidation wave.

Earlier this month, Aetna announced a $69 billion deal to be bought by CVS Health Corp, fueling Wall Street interest in how smaller rivals Humana and Cigna Corp will compete.

Humana agreed two years ago to be bought by Aetna but that deal was blocked by federal antitrust regulators who said that it would be anticompetitive. A similar deal by Anthem Inc. to buy Cigna was also blocked at the time.

Kindred shares were trading at $8.98 per share, down 5 percent, having gained on Monday on Sunday reports of the deal. The $9-per-share price was a 4.7 percent premium over the stock's Friday close.

Humana shares were down 1 percent, or $2.28, at $244.10.

(Reporting by Caroline Humer in New York and Manas Mishra in Bengaluru; Editing by Frances Kerry and Jonathan Oatis)