Brookdale Senior Living to buy Emeritus Corp

Thu Feb 20, 2014 6:32pm EST

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(Reuters) - Brookdale Senior Living Inc (BKD.N) said it would buy Emeritus Corp (ESC.N) for about $1.4 billion in an all-stock deal, creating the largest owner-operator of senior housing in the United States.

Brookdale will also assume $1.4 billion of Emeritus Corp's debt.

The transaction will expand Brookdale's unit capacity by more than two-thirds to a total of about 112,700 units in 1,161 communities.

The merger is expected to reduce operating expenses by up to $45 million annually, said Brookdale CEO Andy Smith, who will be the chief executive of the combined company.

Brookdale said it would offer 0.95 of its shares to each Emeritus share held, at a premium of 32 percent to the closing price of each company's stock on February 19.

The offer translates into $28.41 per Emeritus share.

Emeritus shares rose 28 percent to $27.50 in extended trading on Thursday.

Emeritus shareholders will own about 27 percent of the combined company.

The deal, which will provide Brookdale entry into 10 states, is expected to be neutral on Brookdale's cash from facility operations in the first year of combined operations.

CEO Smith said he expected the merger to generate $100 million of revenue in the third year, by expanding existing home health and therapy services to Emeritus' markets.

The deal is expected to close in the third quarter of 2014.

Brookdale's shares closed at $30.09 on the New York Stock Exchange, while Emeritus shares closed at $21.46.

(Reporting by Shailesh Kuber)

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Comments (1)
TOJ696 wrote:
Amazing how this company can afford to purchase Emeritus! I currently work with Brookdale and we are constantly scrutinized about OT; hours for vital needs (transportation) are being cut and Associate salaries are pathetically low. We are expected to take care of residents which means we carry a lot of responsibility in regard to caring for them. It is a very stressful job and if we are LUCKY … We MIGHT get a 2% raise this year! That’s rumor, however, it might be NOTHING.

Feb 22, 2014 1:36pm EST  --  Report as abuse
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