Hospital operator Kindred offered $16 per share for a 14.9 percent stake in Gentiva, valuing the company at $589 million, based on the 38.6 million Gentiva shares outstanding as of May 7, according to Thomson Reuters data.
The stake would make Kindred the company’s largest single shareholder. Gentiva last month adopted a “poison pill” with a trigger of 15 percent.
Gentiva’s stock rose as much as 4.3 percent to $16.50 on Monday, indicating that shareholders might still be expecting a higher offer.
Kindred, which had previously offered $14.50 per share, said it would not consider increasing its bid again unless Gentiva were to agree to discussions.
In a statement, Gentiva urged its shareholders to take no action. The company did not respond to a request for comment.
U.S. hospitals and providers of home healthcare service have been hit hard by federal budget spending cuts and lower Medicare insurance reimbursement rates.
Analysts said that Kindred, by acquiring Gentiva, would benefit from economies of scale and increase its presence in the home healthcare sector – a potentially lucrative business as the U.S. population grows older.
Kindred went hostile with its bid – at the time, $14 per share – in May, after Gentiva rejected an undisclosed number of private approaches. It raised its offer to $14.50 per share in mid-June.
Gentiva, which describes itself as one of the largest U.S. providers of home health, hospice and community care services, closed 46 branches during last year’s fourth quarter as part of a restructuring program.
Susquehanna Financial Group analyst Chris Higg said that the Gentiva board’s reluctance to discuss the offer would entail a “significant downside risk” for the company “unless Gentiva has something else up its sleeve.”
Kindred has recently written to Gentiva expressing concern that the company may be courting its peer, Amedisys Inc, while refusing to discuss Kindred’s offer.
Kindred had previously been trying to acquire the entire company.
Monday’s 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.
Gentiva’s stock was up about 2.8 percent at $16.23 on the Nasdaq. Kindred shares were up 1.5 percent at $24.74 on the New York Stock Exchange.