LOUISVILLE, Ky. (WDRB) --  Shareholders of Louisville-based Kindred Healthcare have approved a proposal to sell the company to Humana Inc. and a pair of private equity firms, brushing aside criticism that the $9-per-share deal undervalues Kindred.

The vote clears a major hurdle and keeps the deal on track to close this summer. Stockholders approved the deal by a ratio of more-than 3 to 1, with about 77 percent of the company's shares represented in the vote totals. 

“We are pleased that the transaction with the consortium received the broad support of our stockholders in recognition of the robust process undertaken by the Board to achieve maximum value,” Kindred CEO Ben Breier said in a press release. “We look forward to completing the transaction in the coming months and delivering premium cash value to our stockholders.”

Kindred, a home health provider and specialty hospital operator, announced the deal in December.

The merger will combine two of the three largest publicly traded companies headquartered in Louisville, though executives have said they don’t anticipate a significant drop in local corporate employment.

After the sale, Kindred will be de-listed from the stock market and split into a home health company that Humana eventually plans to own outright, and a specialty hospital company owned by private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe.

Humana sees Kindred’s home health operation as a way to boost its strategy of managing the health care of seniors who are enrolled in Medicare Advantage plans, Humana’s main business.

Humana, in turn, could be acquired by Walmart in a deal that would create a behemoth providing senior health insurance, prescription management and primary care in the retailer’s thousands of stores nationwide.

The Wall Street Journal reported last month that Humana and Walmart were in preliminary talks, though neither company has confirmed that and no deal has been announced.

Humana and the private equity firms will pay about $823 million for Kindred, which is bogged down with about $3 billion in long-term debt.

But the $9-per-share price was only about 5 percent more than Kindred’s market price before news of the deal leaked in December.

One of Kindred’s largest shareholders, New York investment firm Brigade Capital Management, called the deal “terrible” for Kindred investors and filed a lawsuit in state court in Delaware in an unsuccessful attempt to stop the shareholder vote.

Glass Lewis, one of the two big firms that advise institutional investors, told shareholders to reject the deal, noting that Kindred’s shares have generally traded above the $9 deal price since December.

Glass Lewis said the deal “appears to have been predicated on something of an opportunistic drop in Kindred’s stock price” in 2017.

Kindred’s stock plummeted to $5.60 a share last year after the federal agency that runs Medicare floated a proposal that would have reduced payments to providers like Kindred. The proposal was withdrawn, but Kindred shares never fully recovered.

Institutional Shareholder Services, the other big institutional advisory firm, came out in favor of the deal.

Executives have said the deal won’t have much employment impact on Louisville because the home health division that Humana will acquire is largely based in Atlanta -- home of Gentiva Health Services, which Kindred bought in 2015.

Meanwhile the surviving Kindred Healthcare will be a privately owned specialty hospital company based in Louisville and led by Breier.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2018 WDRB News. All rights reserved.