Living Centers to acquire GranCare in three-way deal
NEW YORK (AP) _ Living Centers of America Inc. said Thursday it will buy nursing home operator GranCare Inc. for about $234 million, and also buy back 93 percent of its stock in a recapitalization plan.
The companies said the acquisition will create the nation’s second largest provider of long-term care, operating over 330 facilities with more than 38,000 beds in 21 states.
Under the recapitalization plan, Living Centers of America shareholders will receive $37.67 in cash for each of their shares plus .07 shares in the new company. The investment group Apollo Management L.P. will then buy 4.94 million newly issued LCA shares for $200 million.
After the recapitalization, .2469 Living Centers share will be swapped for each GranCare share held. GranCare shareholders will receive stock in the new company valued at $10 a share.
GranCare shareholders will end up owning 49.5 percent of the new company, Apollo will own 39.3 percent, and LCA shareholders will own the remaining 11.2 percent.
The companies put the total value of the deals, which are expected to be completed in the third quarter, at $1.8 billion. The transactions must be approved by shareholders of GranCare and LCA.
Grancare’s stock rose $1 to $8.75 a share in afternoon trading on the New York Stock Exchange, while LCA rose $1.50 to $38 on the Big Board.
Living Centers, based in Houston, had annual revenue of $1.1 billion in its latest fiscal year, compared to $1.0 billion for Atlanta-based GranCare. When complete, the two companies expected cost-savings of about $30 million.