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Kindred Healthcare Inc. said Friday that regulators have cleared its $900 million acquisition of competitor RehabCare Group Inc.

Kindred, based in Louisville, Ky., said in February that it would acquire St. Louis-based RehabCare for about $35 per share in cash and stock. Both companies run long-term acute care hospitals and rehabilitation centers, and the deal would significantly expand Kindred's contract services business. Shareholders of both companies will need to approve the deal, and Kindred needs to complete its financing agreements. It expects the deal to close by June 30.

Shares of Kindred fell 45 cents to $23.75 in morning trading, and RehabCare stock declined 19 cents to $37.08.

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