Health Care REIT Inc. agreed on Wednesday to buy Sunrise Senior Living for $844.6 million in cash, in a deal aimed at creating one of the biggest owners of nursing homes in the United States, Canada and Britain.
Under the terms of the deal, Health Care REIT will pay $14.50 a share, a huge 62 percent premium to Sunrise's Tuesday closing price.
Nursing home operators have been a popular target for deal-making in recent years, as companies and private equity firms seek to take advantage of an increasingly aging population.
Through the deal, Health Care REIT will add 20 senior housing communities that Sunrise owns outright and an interest in joint ventures that control 105 additional properties. Most of the centers are aimed at the higher end of the market and are concentrated in markets like New York, Los Angeles, Chicago and London.
“We are very pleased that Sunrise, a leader in premier care to seniors, is becoming part of our portfolio,†George L. Chapman, Health Care REIT's chairman and chief executive, said in a statement. “There are few opportunities to acquire assets of this quality in a transaction of this scale.â€
Yet Sunrise has posted losses for four of the last five years, having lost $23.4 million last year. On a pro forma basis, which excludes charges related to investigations and restructuring costs, the company reported a $147 million gain for 2011. (The company settled an investigation by the Securities and Exchange Commission into its financial reporting two years ago.)
Based in Toledo, Ohio, Health Care REIT has been a fairly acquisitive buyer of late, having struck 22 takeovers since the beginning of last year, according to Standard & Poor's Capital IQ. As of June 30, its portfolio comprised 1,010 properties in 46 states and Canada.
The deal is expected to close in the first half of next year, pending shareholder approval. If the takeover isn't closed by Feb. 21 because of cert ain extension rights exercised by Health Care REIT, Sunrise shareholders will receive an additional, unspecified payout.
Health Care REIT was advised by Bank of America Merrill Lynch and the law firms Arnold & Porter, Shumaker, Loop & Kendrick and Sidley Austin. Sunrise was advised by Goldman Sachs, KeyBanc Capital Markets and the law firm Wachtell, Lipton, Rosen & Katz.
