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February 8, 2011 7:15 PM

Cleary, Bryan Cave, Armstrong Teasdale on Kindred Healthcare Purchase of RehabCare

Posted by Tom Huddleston Jr.

Kindred Healthcare, Inc. has agreed to purchase RehabCare Group, Inc., in an $877 million cash-and-stock deal that will create the country's largest rehabilitation services provider, the companies announced on Tuesday.

Kindred, a Louisville, Kentucky-based health care services company, will pay $26 per share in cash and 0.471 per share of Kindred stock to RehabCare stockholders. Kindred also is expected to take on roughly $400 million of existing debt from RehabCare.

Cleary Gottlieb Steen & Hamilton advised Kindred on the transaction, while St. Louis firm Armstrong Teasdale represented RehabCare. Bryan Cave represented Rehab's board of directors. 

Based in St. Louis, RehabCare operates 34 long-term acute care and rehabilitation facilities in 42 states and Puerto Rico. The combined company is expected to produce more than $6 billion in annual revenue from 118 long-term acute care hospitals and 226 nursing centers across 46 states. The deal is expected to close on or about June 30.

New York-based M&A partners Ethan Klingsberg and Benet O'Reilly led the Cleary team, along with finance partner Richard Lincer. Kindred is a longtime client of the firm. Klingsberg also advised the company on the 2007 spin-off and the subsequent merger of its pharmacy business with Amerisource Bergen.

The Cleary team included finance partner Andrea Podolsky; compensation partner Michael Albano; real estate partners Steven Horowitz and Steven Wilner; tax partner Sheldon Alster; antitrust partner Mark Nelson; securities partner Janet Fisher; intellectual property partner Leonard Jacoby; and litigation partners Thomas Moloney and Debbie Buell. Suzanne Riedman is Kindred's general counsel, and Joseph Landenwich is the company's senior vice president of legal affairs.

Bryan Cave partner William Seabaugh--leader of the firm's global transactions practice--advised RehabCare's board of directors. M&A partner Joel Lander and associate Taavi Annus also worked on the deal for Bryan Cave.

David Braswell, who heads the corporate practice at Armstrong Teasdale, led that firm's work for RehabCare. The team included corporate partner Michael Jeffries and associate Andrew Voss. Patti Williams is the general counsel for RehabCare. 

In a separate announcement on Tuesday, Kindred released its fourth quarter 2010 financials. The company's revenues in that quarter were up 6 percent, to $1.1 billion, compared with the same period in 2009.

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