NHC senior vice president of corporate communications GeraldCoggin could not be reached for specifics, including the totalmerger value. According to a release, the agreement calls for eachNHR common share not currently owned by NHC to be converted intoone share of NHC Series A Convertible Preferred Stock plus $9 cash.In addition, NHR shareholders will receive a special dividend forthe period from Jan. 1, 2007 until the deal closes. Each share ofthe preferred stock will be entitled to annual preferred dividendsof $.80 per share and will have a liquidation preference of $15.75per share.

A special committee of NHR's board of directors recommended themerger, which has been approved by the board. The completion of thedeal is subject to Hart-Scott-Rodino anti-trust review and approvalby shareholders of both companies. There is no financing conditionto the merger, according to the release.

"The proposed merger provides a larger asset and equity basethat is anticipated to enhance our future growth and our prospectsfor long-term increases in shareholder value as we begin our 36thyear of operation," Robert Adams, NHC president and CEO, says in astatement. "Elimination of the lease payments NHC has been makingto NHR will, assuming continuation of current operating trends,result in a substantial increase in our annual recurring free cashflow, even after providing for the preferred dividends which wewill pay on the new Series A Preferred Stock. Also, NHC will nowown a portfolio of first class healthcare retirement and assistedliving centers which it, in fact, constructed between 1991 and 1997and which continue to be critical to our operations.