SPECIAL UPDATE -- Beverly acknowledges $1.5 billion purchase offer

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Beverly Enterprises Inc. announced Tuesday it is "reviewing" a purchase bid from an investor group that already owns 8.1% of the firm.

Formation Capital LLC offered Beverly $11.50 per share, or $1.5 billion -- and appears willing to go higher. Formation Capital LLC includes Appaloosa Management LP, Franklin Mutual Advisors LLC and Northbrook NBV LLC.

In a filing with the Securities Exchange Commission dated last Wednesday, the investment firms said they "remain prepared to raise the Offer Price accordingly."

Beverly shares rose by 25% to $11.71 in afternoon trading Tuesday after Beverly made the purchase offer publicly known.

Beverly has 351 skilled nursing facilities, the most in the country, as well as 18 assisted living centers and 52 hospice and home health centers. The bid does not include Beverly's home care or therapy businesses. Aegis Therapies provides rehabilitative services to Beverly's own facilities and to 585 facilities operated by others. Beverly operates in 37 states and Washington.

Just last week, Beverly announced it would change its name to BEI to help reflect that the company is moving beyond its core nursing home business. "We no longer see ourselves as just a nursing home company," Chairman and CEO William R. Floyd told investors.