NASHVILLE-Brookdale Senior Living Inc. and Emeritus Corp. said Thursday afternoon that they have agreed to merge in a transaction valued at $2.8 billion, including the assumption of mortgage debt. Following the merger’s close, Brookdale’s unit capacity will grow to 112,694 units in 1,1161 communities across 46 states with what the company says is “the only nationwide network of senior living communities” covering the full spectrum of care.
“With still only 10% market share post-merger, we are confident of our prospects for driving further long-term revenue growth through organic expansion, while enhancing our position in a rapidly consolidating industry,” says Brookdale CEO Andy Smith. The combination is expected to produce “significant operating efficiencies and to enable further investment in the ongoing improvement of our service delivery.” It also greatly increases Brookdale’s unit count in heavily populated states such as California, New York, New Jersey, Georgia and Massachusetts.
Smith will serve as CEO of the combined company, with Mark Ohlendorf taking the role of president and CFO. Granger Cobb, CEO of Seattle-based Emeritus, is expected to join the Brookdale board and continue in a consulting capacity.
Under the agreement, Emeritus shareholders will receive 0.95 shares of Brookdale common stock in exchange for each share of their Emeritus common stock a 32% premium on Emeritus’ shares. The transaction, which is expected to close in the third quarter, includes $1.4 billion of Emeritus mortgage debt.
BofA Merrill Lynch and CS Capital Advisors are serving as financial advisors to Brookdale, with Skadden, Arps, Slate, Meagher & Flom LLP and Bass, Berry & Sims PLC as its legal advisors. For Emeritus, Wells Fargo Securities is serving as lead financial advisor, and Moelis & Co. is also serving as financial advisor to provide an independent fairness opinion to Emeritus; Perkins Coie LLP is providing legal counsel to Emeritus.