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Genesis HealthCare to Acquire Sun Healthcare Group, Inc.

Genesis HealthCare to Acquire Sun Healthcare Group, Inc.

Sun Healthcare Group, Inc. has announced that it has signed a definitive agreement for the acquisition of Sun Healthcare (Sun) by Genesis HealthCare (Genesis). The combined company will be able to strengthen its core business lines and enhance its collective ability to provide the highest quality patient care while meeting the current challenges facing the healthcare industry.

Under the terms of the merger agreement, Genesis will acquire Sun for $8.50 per share of common stock in cash, resulting in a transaction value of approximately $275 million net of cash and debt acquired. Sun Healthcare's Board of Directors unanimously approved the transaction. The closing of the transaction is subject to customary conditions, including approval by Sun stockholders, expiration of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as well as regulatory approvals. The closing is expected to occur in the fall.

The transaction price represents a 43.1% premium over the closing sale price of Sun shares on Tuesday, June 19, 2012 and a 55.6% premium to the volume-weighted average closing sale price of approximately $5.46 during the 30 trading days prior to that date.

Regarding the transaction, William A. Mathies, Sun's Chairman and Chief Executive Officer, stated, "The combined entity will have broad geographic reach and the scale necessary to remain competitive in the post-acute sector. On a combined basis, the two companies generated roughly $4 billion in revenue in 2011 and will have more than 420 facilities and 75,000 employees."

"This transaction brings together two companies with similar operating structures, experienced and deep management teams, and cultures committed to quality patient care," Mathies continued. "Like Sun, Genesis operates a predominantly leased portfolio of skilled nursing and assisted living facilities as well as a fully integrated rehabilitation company. Together, the combined company will be able to use its strengths on a broader scale, which will be advantageous as the post-acute care industry continues to evolve."

"This is a tremendous opportunity to grow our business with an established industry operator," notes Genesis Chief Executive Officer George V. Hager, Jr. "Strategically, we will be able to improve economies of scale while enhancing our footprint and breadth of services. We look forward to welcoming Sun employees to the Genesis family and working together to build a stronger company."

Barclays is acting as Genesis' exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP, Williams Mullen and Arnall Golden Gregory LLP are acting as its legal advisors.

MTS Health Partners, L.P. is acting as Sun's exclusive financial advisor, and O'Melveny & Myers LLP is acting as its legal advisor.


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