NASHVILLE, TENN. AND SEATTLE, WASH. — Brookdale Senior Living Inc. (NYSE: BKD) and Emeritus Corp. (NYSE: ESC) have signed a definitive merger agreement in a transaction valued at $2.8 billion. The merger is expected to be complete in the third quarter of this year.
The new company will be the only single-branded provider operating a nationwide network of senior living communities with fully integrated ancillary services across the care continuum, according to a press release issued jointly by Brookdale and Emeritus on Thursday.
Services provided will include independent living, assisted living, dementia care, skilled nursing, outpatient therapy, home health and hospice care.
“In an industry with very attractive long-term growth dynamics, this strategic merger creates the first national, predominantly private-pay-based, senior living solutions company,” says Andy Smith, Brookdale’s CEO. “This combination will improve our ability to deliver the best, high-quality solutions for the growing demographic of aging seniors and their families.”
Once the merger is complete, a Brookdale community will be within 10 miles of 6.5 million seniors aged 80 or older. It will expand Brookdale’s unit capacity by more than two-thirds, totaling about 112,700 units in 1,161 communities in 46 states. It will also allow Brookdale to enter 10 new states, significantly increasing its presence throughout the West and Northeast. Unit supply will more than double in California, New York, Georgia, New Jersey, Washington and Massachusetts.
The portfolio will have a presence in 330 markets, which houses about 80 percent of the population, creating one of the largest-owned senior housing real estate portfolios in the country.
The merger will also allow Brookdale to expand its therapy, home health and hospice ancillary programs into Emeritus communities. It will accelerate the introduction of Emeritus’ Nurse on Call home health services into Brookdale’s major markets as well.
Smith will serve as CEO, while Mark Ohlendorf will serve as president and CFO of the combined company. Granger Cobb, Emertius’ president and CEO, will likely join Brookdale’s board of directors.
“Both companies share many core strengths, but foremost is a resident-centric culture, with passionate, dedicated associates committed to providing a high level of customer service,” says Cobb, who will take on a consulting role with the new company.
“Combining and maximizing the significant strengths of our two outstanding companies is certain to be of tremendous advantage in supporting our customers and their families as they face the challenges of aging. We are also pleased that Emeritus shareholders will realize compelling and immediate value, as well as the opportunity to participate in the upside potential inherent in this powerful combination.”
Under the agreement, Emeritus shareholders will receive 0.95 shares of Brookdale common stock in exchange for each share of their Emeritus common stock. Based on the closing price of each company’s common stock on Feb. 19, this exchange ratio implies a 32 percent premium on Emeritus’ shares.
BofA Merrill Lynch and CS Capital Advisors are serving as Brookdale’s financial advisors, while Skadden, Arps, Slate, Meagher & Flom LLP and Bass, Berry & Sims PLC are serving as its legal advisors.
Wells Fargo Securities is serving as lead financial advisor for Emeritus, with Moelis & Co. serving as an additional financial advisor to provide the company with an independent fairness opinion. Perkins Coie LLP is legal advisor for Emeritus.
Based in Brentwood, Tenn., Brookdale Senior Living owns and operates senior living communities throughout the United States. It focuses on senior-living solutions within properties that are designed, purpose-built and operated to provide high-quality service, care and living accommodations for residents. Brookdale’s stock price closed at $30.09 per share on Thursday, Feb. 20, up from $27.77 per share one year ago.
Seattle-based Emeritus Senior Living is the nation’s largest assisted living and memory care provider. It has the ability to serve nearly 54,000 residents. Emeritus operates more than 500 communities in 45 states. The company’s stock price closed at $21.46 per share on Thursday, down from $28.04 per share one year ago.
— Nellie Day