Gentiva Health Services has spurned an unsolicited bid by Kindred Healthcare that would have seen the latter take over the company. We explain why share prices of both companies soared during yesterday’s trading session Gentiva Health Services, Inc. (GTIV) closed almost 62% higher yesterday after the company confirmed that it had rejected a $533 million acquisition proposal from rival firm Kindred Healthcare, Inc. (KND). Kindred, which is interested in acquiring Gentiva to expand its services to the aging population, also saw shares rally over 10%. Roughly 21% of the American population will be at least 65 years old by 2050, according to a new US Census Bureau report released this month. This demographic accounted for just 13% of the total population in 2010, and below 10% in 1970. The trend indicates that demand for healthcare products for the elderly will increase going forward, and makes the acquisition of Gentiva a strategic move for Kindred. The upswing in the two companies’ stock prices yesterday reflects the sentiment that a merger of the two could yield significant gains for both. The rejection of Kindred’s bid sets the stage for a takeover battle, and investors will now be waiting Kindred Healthcare’s next move. It may end up looking for other acquisition options, or it may choose to engage in a proxy fight. For now, Kindred has stated that it will pursue Gentiva’s shareholders directly.