Nursing Home Operator Makes $900-Million Bid for Rival
Horizon Healthcare Corp. made a surprise bid for Hillhaven Corp. for $28 a share in stock, or about $900 million, in a takeover that would combine two of the nation’s largest nursing home operators.
Hillhaven said it will consider the proposal. A spokesman declined to elaborate.
In addition to buying Hillhaven’s common and preferred stock, Albuquerque-based Horizon would assume the company’s $577.6 million of debt, bringing the total value of the transaction to about $1.4 billion.
The offer, a 22% premium on Hillhaven’s share price Wednesday, would mark a homecoming for Horizon’s management, including Chief Executive Neal Elliott, who helped build Tacoma, Wash.-based Hillhaven into a large chain in the 1980s. It would also provide badly needed cash for Hillhaven’s largest shareholder, National Medical Enterprises, which is acquiring a rival hospital chain.
National Medical “basically put a ‘For Sale’ sign on Hillhaven” when the hospital company began considering options for its stake last year, said Scott Mackesy, an analyst at Dean Witter Reynolds.
Hillhaven’s shares surged as much as 17% on the news, closing up $3.375 at $26.25 on the New York Stock Exchange. Horizon fell $1.625 to $25.50, and National Medical gained 25 cents to $14.
The merger would create a company with about $2 billion in annual revenue. Hillhaven is the second-largest nursing home operator in number of beds; Horizon ranks sixth.
National Medical, a Santa Monica-based hospital operator, has been considering options for its 31% stake in Hillhaven’s primary shares. In October, National Medical agreed to acquire American Medical Holdings for about $2 billion.
The Horizon-Hillhaven transaction would add 5 to 10 cents a share to the combined companies’ earnings in the year after it was completed, a Horizon official said.
