CORRECTED-UPDATE 1-Kindred Healthcare raises offer for Gentiva to $16/shr

Mon Jul 14, 2014 12:58pm EDT

(Corrects valuation of Gentiva in paragraph 1 to about $589 million from about $2.53 billion)

July 14 (Reuters) - Hospital operator Kindred Healthcare Inc raised its offer for Gentiva Health Services Inc to $16 per share, valuing the home healthcare services provider at about $589 million.

Gentiva's stock rose about 2 percent to $16.08 in trading before the bell.

The sweetened offer represents a premium of 87 percent to Gentiva's May 14 close, a day before Kindred made public its offer of $14 per share.

The latest offer comes two days before the expiry of Kindred's previous raised tender offer of $14.50 per share.

Kindred, which has urged Gentiva shareholders to ignore the board and vote for its offer, also said it would not consider further increasing the bid unless Gentiva agreed to engage in discussions.

The company, in recent weeks, has also written to Gentiva expressing concern that the company may be courting its peer Amedisys Inc while refusing to discuss Kindred's offer.

Kindred is looking to acquire 14.9 percent of Gentiva's shares, making it the largest shareholder, after Gentiva adopted a "poison pill" with a trigger of 15 percent.

"Poison pills," also called shareholder rights plans, are designed to stop hostile takeover attempts by triggering the issuance of new shares that dilute the holdings of investors who exceed a set threshold.

Kindred's shares closed at $24.38 on the New York Stock Exchange while Gentiva's stock closed at $15.82 on the Nasdaq on Friday.

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