Real estate investment trust HCP signed a definitive agreement to purchase substantially all of the real estate assets of HCR ManorCare, a privately owned skilled-nursing and post-acute-care provider, in a deal valued at $6.1 billion, according to an HCP news release.
HCP inks deal to buy HCR ManorCare assets in $6.1 billion deal
The agreement calls for Long Beach, Calif.-based HCP to pay $3.5 billion in cash; reinvest $1.7 billion of HCR ManorCare debt already held by HCP; and issue 25.7 million shares of HCP common stock currently worth $852 million to HCR ManorCare shareholders, according to the news release. HCP has the option of substituting the stock for $852 million in cash. The deal also gives HCP the option to purchase 9.9% of HCR ManorCare for an additional $95 million.
HCR ManorCare and its affiliates would continue to operate the facilities purchased by HCP under a long-term master lease calling for $472.5 million to be paid the first year, with subsequent rent increases built into the deal.
Paul Ormond, chairman, president and CEO of HCR ManorCare, will be invited to join HCP's board.
The deal was approved by HCP's board and HCR ManorCare's shareholders. Completion of the deal is subject to regulatory approval and other customary closing conditions and is expected to come late in the first quarter of 2011.
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