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Managers May Seek to Buy Beverly Enterprises

October 28, 1986

PASADENA, Calif. (AP) _ Beverly Enterprises Inc., one of the nation’s largest nursing home operators, said Tuesday that some of its senior executives and outside investors are considering taking the company private in a leveraged buy-out.

The company halted trading in its shares on the New York Stock Exchange before making a brief announcement that the buy-out offer was in the works.

The company’s shares were bid up by $1.62 1/2 per share to $19 before the trading halt. On Monday, the stock rose by $1 per share amid speculation that a takeover or management-led buy-out attempt was in the offing.

The company has about 64 million shares of common stock outstanding.

Robert Van Tuyle, chairman and chief executive of Beverly Enterprises, confirmed in an interview that he and company president David R. Banks were among the investors considering making an offer.

The offer, if made, would be considered by Beverly Enterprises’ four outside directors, the company said, adding, ″There is no assurance that any proposal will be made or that, if made, it would be acceptable to the company.″

In a leveraged buyout, a target company is acquired largely with borrowed funds that are paid off either through the sale of the company’s assets or with its operating earnings.

Beverly Enterprises was founded as a partnership in 1963 and went public three years later. It operates 1,200 nursing homes with 125,000 beds in 46 states.

For the nine months ended Sept. 30, the company’s net income rose by 12 percent to $46.6 million, or 74 cents per share, on revenue of $1.49 billion, compared to a year earlier when it netted $41.7 million, or 75 cents per share, on revenues of $1.24 billion.

Beverly Enterprises, by not being involved in acute-care hospitals, has managed to avoid the major corporate restructurings undertaken by other health-care concerns plagued by declining patient loads and limits on government reimbursement.

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