Brookdale rejects buyout offer, announces turnaround plan

Brookdale Senior Living's board has rejected a buyout offer in favor of appointing new leadership to oversee the company's turnaround.

The Nashville, Tenn.-based senior living provider announced its board rejected a conditional buyout offer worth between $9 and $11 per share, in part because it did not believe the conditions would be satisfied.

Brookdale director Lee Wielansky told investors in a conference call Thursday that the board ultimately determined it would bring them more value by driving higher performance as a public company under new leadership.

"The board also believes the rejected offer and our current share price is significantly below the company's intrinsic value and below our net asset value," said Wielansky, whom the board elected to serve as the company's non-executive chairman.

As part of a year-long strategic review that began in February 2016, Brookdale's board negotiated with a number of potential buyers, some of whom expressed interest in paying more than the offer the board ultimately rejected, Wielansky said. However, none of those resulted in firm offers.

The board also appointed Lucinda "Cindy" Baier, Brookdale's CFO, as the company's new president and CEO effective Feb. 28. Current president and CEO T. Andrew Smith will step down from the role and serve as a board member. Bryan Richardson, the company's executive vice president and chief administrative officer, will leave the company effective March 9. His position will not be refilled. Two board members also announced their retirement from the board.

Baier will continue to serve as the company's principal financial officer while Brookdale searches for her replacement.

"Although Brookdale has underperformed, we have a strong foundation and tens of thousands of associates who are committed to our mission and to the residents we serve," Baier told investors.

Brookdale in recent years has struggled with its $2.8 billion acquisition of Seattle-based Emeritus Corp. in 2014, but is also weighed down by trends affecting the senior living industry. The company reported net income of $15 million in its fourth quarter of 2017 on revenue of $1.17 billion. That's compared with a net loss of $268.6 million at the same point in 2016 on revenue of $1.21 billion.

The company's net loss widened to $571.6 million in 2017 on revenue of $4.75 billion. Its net loss was $406.6 million in 2016 on revenue of nearly $5 billion.

At the end of 2017, Brookdale operated roughly 1,000 communities in 46 states. Its occupancy rate was 85% in 2017, down slightly from 86% in 2016.