Senior living provider Five Star Quality Care on Monday formally rejected the $325 million takeover bid by an affiliate of real estate investment and management company Senior Star.
The rejection letter was disclosed in a U.S. Securities and Exchange Commission filing by Newton, Mass.-based Five Star.
The bid for Five Star's 33 facilities was made by Gemini Properties, described in SEC filings as an affiliate of Senior Star, a privately held company that owns senior living facilities in Illinois, Iowa, Missouri, New Mexico, Ohio and Oklahoma.
The letter rejecting the offer was addressed to William Thomas, principal of Tulsa, Okla.-based Senior Star, who met with Five Star brass on Nov. 30 in Boston to try to sell the deal.
“After careful review of your public filings and your letters, the board unanimously determined to reiterate the preliminary reactions provided to you on Nov. 30, 2015: Five Star's owned assets are not for sale,” said Jennifer Clark, secretary of Five Star.
The company's business plan is to expand its owned communities, not dispose of them, Clark said.
Senior Star had previously argued that of the $325 million in gross proceeds from the proposed deal, $44.3 million would go toward mortgage debt retirement, $172.3 million would go to capital reinvestment and $91.5 million would go to lease deleveraging, leaving Five Star with $16.9 million in reserve funds from the transaction.
Clark responded in the letter that many of the company are already pursuing many of the initiatives suggested by Senior Star.
Five Star, which reported $1.3 billion in revenue in its fiscal 2014, is among the top five companies by revenue on Modern Healthcare's 2015 list of the largest skilled-nursing providers. The company's shares traded at $3.34 midday Monday.