Kindred Healthcare Inc. reached an agreement to acquire Gentiva Health Services Inc. for $1.8 billion, a deal that will build up Kindred’s hospice and home health-care businesses.

Shareholders of Atlanta-based Gentiva will receive $14.50 per share in cash and $5 of Kindred common stock in the deal, according to a statement released by the companies today.

“This combination strengthens our ability to serve patients across the full continuum of care –- from the hospital to the home,” Kindred Chief Operating Officer Benjamin Breier said in the statement.

Gentiva rose 17 percent to $19.63, while Kindred shares gained 6.7 percent to $21.07 at 9:33 a.m. in New York.

The combined company will be the fourth-largest health-care employer in the U.S., with operations in 47 states and more than 1 million patients a year, the companies said in their statement.

Kindred, based in Louisville, Kentucky, said it will cut $1 billion in costs from the combined company, which it expects to have $7.1 billion in annual revenue.

For more coverage on health care, see 5 Technologies Drive Health Care M&A.

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