Nursing Home Firm Beverly Enterprises Agrees to Buyout

Beverly Enterprises Inc., which operates 345 nursing homes from California to Virginia, agreed to be acquired by a newly formed investor group for $1.63 billion in cash after rejecting an unsolicited offer from another group in March.

North American Senior Care Inc., whose principals weren’t identified, would pay $12.80 for each of Beverly’s 127.1 million shares outstanding, Fort Smith, Ark.-based Beverly said Wednesday. That is less than Beverly’s closing price of $12.94 on Tuesday. North American also would assume $224 million of debt, the company said.

Becoming a private company would enable Beverly to cut costs without having to worry about shareholders, said Les Funtleyder, a health strategist at Miller Tabak & Co. Beverly and other nursing-home operators face cuts in the amount of money they receive from the federal government for patients with Medicare when new regulations take effect in January.

“They will probably continue to work on their longer-term strategy without having to worry about short-term concerns like making a quarterly number,” Funtleyder said.

The nursing home business, aside from a few recent changes in Medicare rules, has been fairly profitable, Funtleyder said. The company’s net income fell in 2004 from the year earlier, when it posted its first annual profit after five straight years of losses.

Beverly is the second-largest U.S. nursing home operator, with 36,995 beds as of Dec. 31, according to Provider magazine, which is published by the American Health Care Assn. It also runs 64 hospice and home care centers and 18 assisted-living units. Manor Care Inc. is the largest, with 38,399 beds.

Shares of Beverly fell 39 cents to $12.55.

Beverly put itself up for auction in March after it rejected an offer of $1.4 billion, including assumed debt, as too low.