Should Amedisys Inc (AMED) & Almost Family Inc (AFAM) Consider a Merger as North Tide Capital Suggests?

North Tide Capital, a hedge fund managed by Conan Laughlin, has issued a letter sent to the board of directors of Amedisys Inc (NASDAQ:AMED) suggesting that the company should consider a merger with Almost Family Inc (NASDAQ:AFAM). The fund owns shares of both companies; its stake in Amedisys contains 4.0 million shares, which represent 12% of the company’s stock and in Almost Family it owns an 11.5% position, which amasses 1.09 million shares.

According to the investor a potential merger would provide more value creation opportunities for both companies and, respectively, for their shareholders. Among the reasons for the deal, North Tide mentioned that a merger would help Amedisys Inc (NASDAQ:AMED) to sole its corporate overhead inefficiencies and it will improve the market density and competitive positionining in several overlapping geographies. In addition, since Amedisys is currently looking for a new CEO, the chief executive of Almost Family Inc (NASDAQ:AFAM) William Yarmuth and President Steven Guenthner are two suitable candidates for this position. The deal can be also supported by the majority of shareholders of both companies, since, according to North Tide there is a more than 60% overlap that would facilitate the transaction.

Both Amedisys Inc (NASDAQ:AMED) and Almost Family are two healthcare companies engaged in home healthcare service, whose stocks spiked amid North Tide disclosing its letter. The fund is the largest shareholder of Amedisys Inc (NASDAQ:AMED) among the funds that we track, being followed by  James H. Litinsky‘s JHL Capital Group, which disclosed holding 905,000 shares in its latest 13F filing. Moreover, Israel Englander‘s Millennium Management has been bullish on the stock during the third quarter as it raised its exposure by 2,800% to 423,100 shares. North Tide is also the largest shareholder of Almost Family Inc (NASDAQ:AFAM), being followed by Kevin Kotler‘s Broadfin Capital, which initiated a stake during the third quarter with 224,200 shares.

North Tide is a healthcare-oriented hedge fund with an equity portfolio worth around $1.30 billion. North Tide has been a long-term shareholder of both companies and has held shares of Amedisys Inc (NASDAQ:AMED) since 2011 and Almost Family Inc (NASDAQ:AFAM) since 2012. But the investor consders that the industry needs to consolidate, which is why a merger could benefit both companies.

Disclosure: none