Brookdale Senior Living (BKD) to Acquire Emeritus (ESC) in $2.8B Stock Deal

February 20, 2014 4:57 PM EST
Brookdale Senior Living Inc. (NYSE: BKD) and Emeritus Corporation (NYSE: ESC) today announced the signing of a definitive merger agreement to create the first national senior living solutions company.

The combined companies will serve the growing market for senior living solutions as the single branded provider operating the only nationwide network of senior living communities with fully integrated ancillary services across the continuum of care. Following the merger, a Brookdale community will be within 10 miles of 6.5 million seniors 80 years or older.

Under the agreement, Emeritus shareholders will receive 0.95 shares of Brookdale common stock in exchange for each share of their Emeritus common stock. Based on the closing price of each company's common stock on February 19, 2014, this exchange ratio implies a 32% premium on Emeritus' shares. The transaction value totals $2.8 billion, with the inclusion of $1.4 billion of Emeritus mortgage debt. The transaction is expected to have a neutral impact on Brookdale's Cash From Facility Operations in the first year of combined operations, which will grow to exceed $0.40 per share of accretion for the third year. The transaction is expected to close in the third quarter of 2014.

Andy Smith will serve as Chief Executive Officer and Mark Ohlendorf as President and Chief Financial Officer of the combined company. It is anticipated that certain members of Emeritus' senior management team will continue in senior positions after the merger. It is also anticipated that Granger Cobb will be joining Brookdale's Board of Directors, and will continue in a consulting role with the company. The Company's corporate headquarters will remain in Nashville.

The Boards of Directors of both Brookdale and Emeritus have unanimously approved the merger, which is expected to be completed in the third quarter of 2014, subject to receipt of regulatory approvals (including pursuant to the Hart-Scott-Rodino Antitrust Improvements Act) and shareholder approvals for each company, as well as other customary closing conditions.

BofA Merrill Lynch and CS Capital Advisors are serving as financial advisors to Brookdale and Skadden, Arps, Slate, Meagher & Flom LLP and Bass, Berry & Sims PLC are serving as its legal advisors. Wells Fargo Securities is serving as lead financial advisor, and Moelis & Company is also serving as financial advisor to provide an independent fairness opinion to Emeritus; Perkins Coie LLP is serving as Emeritus' legal advisor.

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