Ventas to buy ARC Healthcare Trust to create largest healthcare REIT

(Updated with comment at 3:40 p.m. ET.)

Ventas, a Chicago-based real estate investment trust, plans to acquire competitor American Realty Capital Healthcare Trust in a $2.6 billion deal. With the deal, publicly traded Ventas, already one of the country's largest healthcare REITs by market capitalization, would assure its position at the top of the group.

Under the proposal, ARC investors have the option to receive either $11.33 in cash or 0.1688 Ventas common shares for each ARC share they hold. The deal represents a 14% premium over ARC's share price last Friday and has been approved by both boards of directors.

It is expected to close in the fourth quarter but still needs approval from ARC shareholders.

In a news release, the companies stressed that they have complementary portfolios in medical office buildings and senior housing. ARC's properties are located in markets where home values and senior demographics are higher than the national average, Ventas said.

The offer from Ventas was unsolicited but attractive. “The deal came together relatively quickly,” said Steven Lichtenfeld, partner and co-head of the Real Estate Capital Markets and Real Estate Finance groups at law firm Proskauer, which represented ARC in the deal. “There were motivated parties.”

Shares of ARC began trading on the NASDAQ on April 7, when they opened at $10.50. A tie-up with Ventas will give the company greater access to capital, allowing it to execute on larger transactions than ARC could alone. “Scale is a differentiator,” Lichtenfeld said.

Separately, Ventas also disclosed a deal to acquire 29 independent living communities in Canada from Holiday Retirement. Under that transaction, which is expected to close in the third quarter, the properties will be managed by Atria, a company partly owned by Ventas.

The $900 million deal also expands Ventas' international footprint, bringing its net operating income from international properties to 5%.

ARC Healthcare's stock surged $1.10, or 11.1% to $11.05 in morning trading Monday. Ventas shares fell $1.45, or 2.2%, to $65.35.

Follow Beth Kutscher on Twitter: @MHbkutscher