Brookdale Senior Living has signed an agreement to merge
with Emeritus Corp. in a deal that will create a senior housing company with operations in 46 states.
The $2.8 billion transaction will allow Brookdale to reach 330 markets that cover 80% of the U.S. population, according to a company release.
The addition of Seattle-based Emeritus, one of the largest assisted-living facility operators in the country, puts Brookdale in 10 new states and more than doubles its presence in California, New York, New Jersey, Massachusetts, Georgia and Washington.
The purchase price includes the assumption of $1.4 billion in Emeritus mortgage debt and represents a 32% premium over Emeritus' closing share price on Feb. 19, the day before the deal was announced. Under the terms of the deal, Emeritus shareholders will receive 0.95 Brookdale shares
for each share they hold.
The deal is expected to close in the third quarter following approval from shareholders and antitrust regulators. The tie-up would give Nashville-based Brookdale about 10% of the senior housing market, the release said.
It comes at a time when occupancy rates for senior housing properties continue to increase. The overall occupancy rate for the fourth quarter was 89.7%, representing a 0.7%, year-over-year increase, according to the National Investment Center for the Seniors Housing & Care Industry
. The occupancy rate was stronger for independent living than assisted-living properties.
Brookdale's current CEO, Andy Smith, will continue to serve in that role, while Mark Ohlendorf will remain president and CFO. Emeritus CEO Granger Cobb will join the combined company's board of directors.
Emeritus shares popped more than 36% on the news to trade slightly above the offer price. Brookdale shares also reached their 52-week high. Follow Beth Kutscher on Twitter: @MHbkutscher