Healthcare: Ventas to Buy Nationwide Health Properties for $5.7 Billion


Ventas said on Monday that it has agreed to buy Nationwide Health Properties for about $5.7 billion in stock, forming the biggest health care real estate investment trust in the country, with a large presence in senior housing.

The deal is among the latest spurred on by the changing landscape of the health care industry, including a growing elderly population and the Obama administration’s overhaul of health care rules.

It also arises from the recovery in commercial real estate prices.

Through the acquisition, Ventas will own more than 1,300 properties across the country and in Canada, and it will become the largest owner of assisted living housing in the United States. About 70 percent of its net operating income comes from private-pay insurance, as opposed to government programs.

Ventas has been among the most acquisitive of REITs, having struck four deals last year. By buying Nationwide, the company is seeking to grow dramatically while also cleaning up its balance sheet by lowering its overall debt level.

“It enhances our scale and competitiveness,” Debra A. Cafaro, Ventas’s chairmwoman and chief executive, said in a telephone interview on Monday. “And together, we’ll have best balance sheet around.”

She added that she expected more consolidation within the health care real estate sector.

Under the terms of the deal, Ventas will issue 0.7866 of a share, worth about $44.99 at Friday’s closing price, for each Nationwide share. That represents more than a 15 percent premium to Nationwide’s closing price on Friday of $38.96.

Ventas shareholders will own about 65 percent of the combined company, which will retain that company’s name, and Nationwide’s investors will own 35 percent.

Shares in Nationwide jumped 9.7 percent to $42.74 on Monday, their highest level in a decade. Shares in Ventas fell more than 3 percent to $55.42.

Nationwide began exploring its strategic options about eight months ago, Douglas M. Pasquale, the company’s chairman and chief executive, said in an interview. But after several months, the company had decided that pursuing a deal with Ventas made the most sense.

“All roads led to Ventas,” he said. “It’s a very natural thing, really, since we shared the same core values.”

Ms. Cafaro will remain chairwoman and chief executive of the combined company, which will keep Ventas’s name and headquarters in Chicago. Mr. Pasquale will work as a senior adviser for the transition period. Three Nationwide directors, including Mr. Pasquale will be added to Ventas’s board, which will expand to 13 members.

The deal is expected to close in the third quarter, pending shareholder and regulatory approval.

Ventas was advised by Centerview Partners and the law firm Wachtell, Lipton, Rosen & Katz, while Nationwide was advised by JPMorgan Chase and the law firm Skadden, Arps, Slate, Meagher & Flom.


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