One of the largest investors of Sun Healthcare Group sent a letter to the Irvine, Calif., skilled-nursing-care company's board urging it to sell, according to a news release.
Sun Healthcare urged to sell
Officials from New York City-based Clinton Group wrote that Sun is undervalued in public markets and could be successful as a standalone business. A news release did not divulge how large of a stake Clinton held in Sun, saying only that it was one of its top 15 investors.
A sale today could yield Sun shareholders $6 to $8 a share, Clinton officials wrote. The news drove Sun shares up on Monday, as they closed at $3.69, up more than 17%, with a market value of $93.8 million.
“The unexpected cuts to Medicare reimbursement rates have severely impacted the company and its peers,” according to the Dec. 12 letter. “And while we believe that management responded briskly with a risk mitigation plan that has been effectively communicated to investors, the stock price continues to languish and fails to reflect the true value of Sun's operations. We believe the time has come to sell the company to a larger industry participant.”
Sun shares fell more than 75% this year, including 10% since August, Clinton officials wrote. Sun's CEO and Chairman William Mathies saw his portfolio shrink this year by $2.1 million to $735,000.
Mathies, in a letter sent to Clinton and filed with the Securities and Exchange Commission, wrote that Sun's board would review Clinton's suggestions and explore “all reasonable alternatives to increase stockholder value.”
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