Genesis HealthCare agreed in June to purchase rival Sun Healthcare Group in a transaction that should close the second half of 2012.
The deal involves Genesis paying around $275 million net of cash and debt at $8.50 per share of common stock.
“Sun’s portfolio of businesses is a strong complement to Genesis and the combined operations will enable us to leverage economies of scale that better position Genesis in the post-acute care industry,” Genesis CEO George V. Hager Jr. said in a statement.
The price was a 43.1% premium over the closing sale price of Sun shares on June 19 and a 55.6% premium to the volume-weighted average closing sale price of approximately $5.46 during the 30 trading days prior, Sun Chairman and CEO William A. Mathies said in a statement. In 2011, the two companies combined had 420 facilities and 75,000 employees, and generated roughly $4 billion in revenue, he said.
Sun had said it would reassess its operating strategy following the news of an 11.1% reimbursement cut last fall. In December, a large investor had called for its sale.
“Like Sun, Genesis operates a predominantly leased portfolio of skilled nursing and assisted living facilities as well as a fully integrated rehabilitation company,” Mathies said. “Together, the combined company will be able to use its strengths on a broader scale.”
Prior to the acquisition, the privately held, PA-based Genesis operated 200 skilled nursing facilities and assisted living centers in 13 states.
The eighteen facilities currently leased by Health Care REIT to Sun will be added to the master lease with Genesis, Health Care REIT Chairman and CEO George L. Chapman said in a statement.
The deal allows “George Hager and his team the opportunity to expand the Genesis portfolio and to increase the scale of its rehabilitation therapy, hospice and inpatient services,” Chapman said.