Accipiter not in favor of VistaCare, Odyssey combination

By Lisa Kerner

Charlotte, N.C., Feb. 7 - VistaCare, Inc. shareholder Accipiter Capital Management said Odyssey Healthcare, Inc.'s $8.60-per-share offer for VistaCare is inadequate and suggested the company could be valued at $11.50 per share.

Accipiter and affiliates, together owing some 10% of VistaCare's stock, do not intend to tender their shares in connection with the offer and encouraged fellow VistaCare shareholders to do likewise.

In addition, the investors plan to exercise their appraisal rights permissible under law if the tender offer and subsequent merger are completed, according to a Feb. 6 letter from Accipiter to VistaCare's board of directors. The letter was included in an Accipiter news release.

According to Accipiter, VistaCare's board is selling the company at a discount and not a premium. The per-share offer price "represents a 7% discount from VistaCare's stock price when its board of directors announced it was reviewing strategic alternatives in May 2007," the letter stated.

Accipiter said VistaCare's successful restructuring efforts are not reflected in Odyssey's purchase price.

"We note that VistaCare has cash and short term investments of $29.4 million and a Medicare cap liability of $11.6 million for net cash of $17.8 million or $1.10 per share, meaning that Odyssey's offer effectively values VistaCare at $7.50 per share," the letter stated.

Accipiter estimated VistaCare's enterprise valuation at $180 million and its equity valuation at $197 million.

In closing, Accipiter said it believes VistaCare stockholders would be better served by the company remaining a standalone entity and continuing to execute on its turnaround plan.

Odyssey subsidiaries began an $8.60-per-share tender offer for VistaCare on Jan. 30. It was previously reported that the offer will end at midnight ET on Feb. 27.

Odyssey agreed to acquire VistaCare for $147.1 million in a deal set to close in the first quarter.

Both VistaCare and Odyssey are hospice care providers. VistaCare is located in Scottsdale, Ariz., and Odyssey is based in Dallas.

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