Genesis HealthCare Corp., Kennett Square, Pa., inked a deal yesterday to acquire Sun Healthcare Group for a hefty $273.3 million net of cash and debt acquired. The acquisition puts Sun stock at a price of $8.50 per share—a 43.1 percent premium over the closing sale price of Sun shares on Tuesday, June 19, the companies said in statements.
Uniting the two nursing home giants could make Genesis, ranked No. 5 this year on Provider’s list of the Top 50 Largest Nursing Home Companies, the largest nursing home provider in the United States by a healthy margin of nearly 10,000 beds more than the current top contender, HCR ManorCare.
“Strategically, we will be able to improve economies of scale while enhancing our footprint and breadth of services,” said Genesis Chief Executive Officer (CEO) George Hager Jr.
Little more than one year ago, Health Care REIT (HCN), a real estate investment trust, acquired the real estate assets of Genesis for $2.4 billion in an arrangement that gave Genesis a long-term triple-net master lease, while HCN reserved the right to own certain facilities that Genesis had leased from third-party landlords.
In a statement that perhaps portended yesterday’s announcement, Hager said of the HCN deal in February 2011 that Genesis would continue its “high level of investment in optimizing and expanding our facilities to meet the needs of our increasingly acute patient population.”
The union of Irvine, Calif.-based Sun, ranked No. 7 this year on the Top 50 list, and Genesis will create a company that will have “broad geographic reach and the scale necessary to remain competitive in the post-acute sector,” said William Mathies, Sun chairman and CEO.
Once combined, the two companies will have more than 420 facilities and 75,000 employees, Mathies added.