SEATTLE-Locally based Emeritus Corp. has agreed to acquire a smaller competitor, Summerville Senior Living of San Ramon, CA, for 8.5 million shares of stock. Emeritus' share price is trading 10% higher today on the news in early afternoon trading stood at $33.06, up $3 from Thursday's close. At that price, the value of the deal is $281 million.
Summerville operates 81 communities, with 7,935 units in 13 states providing independent living, assisted living and other services to seniors. After the merger closes, Emeritus said it will operate 284 communities with 24,448 units in 36 states and capacity for over 28,000 residents.
The proposed deal is expected to close in July. If it does, Summerville shareholders will hold about 31% of Emeritus' outstanding stock. Summerville shareholders include Apollo Real Estate Investment Funds III and IV and certain employees of Summerville.
The Apollo Funds, as holder of a majority of the voting stock of Summerville, have approved the merger. Saratoga Partners IV LP and Daniel R. Baty, CEO of Emeritus, as combined holders of approximately 65% of the voting stock of Emeritus, have agreed to vote in favor of the merger.
Upon completion of the merger, Summerville will be a wholly owned subsidiary of Emeritus Corp. and will retain the brand name in the operation of its communities. Summerville president/CEO Granger Cobb will assume the titles of president and co-CEO of Emeritus. A representative designated by the Apollo Funds and Granger Cobb will each have a seat on the board of directors of Emeritus.
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