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Humana showed interest in buying Kindred Healthcare while it was still connected to Aetna merger talks. Luke Sharrett / Bloomberg via Getty Images

Kindred Healthcare, the operator of numerous home health and hospice agencies and rehab hospitals, was holding acquisition talks for roughly a year and a half before it finally accepted the deal proposed by Humana, TPG Capital and Welsh, Carson, Anderson & Stowe, according to a new federal securities document.

The bottom line: There were many reasons Kindred decided to sell, including its large debt load and struggling finances. But executives also were worried about Congress cutting Medicare and Medicaid, a big revenue source for Kindred, to pay for the newly enacted corporate tax cuts.

The details: Kindred's buyout process started in earnest in the spring of 2016 and had a winding path until the deal was announced this past December.

  • More than a half dozen private-equity firms expressed interest in owning Kindred.
  • Humana CEO Bruce Broussard initiated a meeting with Kindred CEO Ben Breier at the 2017 J.P. Morgan Healthcare Conference to talk shop — even though Aetna was still trying to acquire Humana, and before a federal judge ruled against the Aetna-Humana deal.
  • By the time Aetna and Humana officially ended their deal last February, Broussard and Breier had already discussed "potential collaborations."
  • At one point, Kindred received a takeout offer for $16 per share from another interested party before due diligence was conducted, but still well above the $9 per share it ultimately accepted. Because the buyout process lasted so long, Kindred’s stock price fluctuated quite a bit over time.
  • The event that momentarily crippled Kindred's fire sale process: When the Centers for Medicare & Medicaid Services proposed slashing home health payment rates by $1 billion in 2019 by switching to a new payment system.
  • Breier and fellow industry CEOs lobbied CMS to scrap that proposal, and they got what they wanted, which helped boost Kindred's share price.
  • Kindred was still worried about its long-term business, which relies heavily on Medicare and Medicaid patients, turning the Humana and private equity offer into a priority.

1 big stat: Breier is expected to pocket a golden parachute of $19.2 million if the deal is approved and if he doesn't stick around after.

Clarification: This post has been corrected to show that Kindred’s $16 per share offer came before due diligence was conducted and that Kindred’s stock price was volatile over the process. 

Go deeper

Anti-abortion activists' Supreme Court dreams are coming true

Photo illustration: Annelise Capossela. Photos: Kevin Dietsch/Getty Images

This is the moment the conservative legal movement has been building toward for decades: The solidly conservative Supreme Court is about to hear two major abortion cases within a month of each other.

Why it matters: All of this is likely to end with significant new restrictions on abortion and a clear path for Republican-led states to win the next big abortion cases, too — the culmination of a long and bitter fight for control of the judiciary.

Felix Salmon, author of Capital
3 hours ago - Economy & Business

Trump's volatile return to the stock market

Expand chart
Data: YCharts; Chart: Axios Visuals 

Donald Trump this week became both a meme stock and a social-media entrepreneur at the same time, by announcing that a new company called Trump Media & Technology Group was going to merge with an existing company listed on the stock market.

Why it matters: The medium-term promise of Trump's media company is that it will replace Twitter for anybody wanting to keep track of Trump's messages. The short-term promise is that it can be a hot new speculative vehicle for people wanting to get rich quick in the stock market.

Updated 13 hours ago - World

U.S. airstrike kills senior al-Qaeda leader in Syria, DOD says

A displacement camp near the village of Qah in Syria's northwestern Idlib province. Photo: Ahmad Al-Atrash/AFP via Getty Images

A U.S. airstrike in northwest Syria on Friday killed senior al-Qaeda leader Abdul Hamid al-Matar, U.S. Central Command said in a statement.

Why it matters: Syria serves as a "safe haven" for the extremist group to plan external operations, according to U.S. Army Maj. John Rigsbee.