HUNT VALLEY, MD. AND CHICAGO — Omega Healthcare Investors (NYSE: OHI) and Aviv REIT (NYSE: AVIV) have agreed to merge in a blockbuster deal. Omega will acquire all of the outstanding shares of Aviv.
The transaction values Aviv at $3 billion. Omega company officials say that the transaction creates the “premier publicly traded pure-play skilled nursing facility REIT.” The deal is expected to close in the first quarter of 2015.
The combined company will have a diversified portfolio that includes 83 operator relationships in 41 states.
Aviv shareholders will receive a fixed exchange ratio of 0.90 Omega shares for each share of Aviv common stock they own, per the agreement. This consideration would be equivalent to $34.97 of Omega stock for each Aviv share, representing a premium to Aviv shareholders of about 16.2 percent over Aviv’s stock price.
Omega shareholders are expected to own about 70 percent and Aviv shareholders, together with the limited partners of Aviv Healthcare Properties Limited Partnership, will own 30 percent of the combined company. The stock-for-stock transaction is intended to be tax-free to shareholders.
Following the merger, Taylor Pickett, Omega’s CEO, will continue to serve as CEO of the combined company, while Craig Bernfield, current Aviv chairman and CEO, will join the board of directors of the combined company. Aviv is based in Chicago.
“The combination of Omega and Aviv creates the premier pure-play skilled nursing facility REIT which, with the expertise and proven track records of the combined management teams, will be well-positioned to continue as the leading consolidator in the large, highly fragmented SNF industry,” says Pickett of Hunt Valley, Md.-based Omega Healthcare.
“This merger is consistent with Omega’s long history of executing value-creating transactions. The combined sourcing and development capabilities of this company, coupled with its strong balance sheet, provides enhanced capacity to drive growth and is expected to continue to decrease our cost of capital,” adds Pickett.
Bernfield, Aviv’s leader, describes the deal as a strategic combination of two best-in-class companies that have been successful investors in the skilled nursing sector over the past few decades.
“The combined company will now be positioned to be the premier consolidator of SNF real estate for years to come,” asserts Bernfield. “Our merger with Omega will allow us to take advantage of Omega’s long-term success in the public markets, the scale of the combined company, and Omega’s superior access to capital and lower cost of capital to continue to drive accretive growth by leveraging our relationships with high-quality operators to find attractive off-market and widely marketed acquisition opportunities.”
Morgan Stanley & Co. LLC acted as the exclusive financial advisor to Omega, while Bryan Cave LLP, Doran Derwent, PLLC and Kaye Scholer LLP acted as legal counsel. PJT Partners and Goldman, Sachs & Co. served as financial advisors to Aviv, while Sidley Austin LLP was legal counsel.
Omega is a REIT that specializes in the long-term care industry. Chicago-based Aviv is a REIT that specializes in post-acute and long-term care facilities, as well as other healthcare properties.
Omega Healthcare Investors’ stock price closed Thursday, Oct. 30, at $38.85 per share, up from $33.43 per share a year ago.
AVIV’s stock closed at $30.10 per share on Thursday, up from $25.62 a year ago.
— Nellie Day