Manor Care to be acquired by Carlyle

Manor Care Inc., the largest U.S. owner of nursing homes, said Monday that it had agreed to be acquired by Carlyle Group for $4.9 billion, making it the latest healthcare provider taken off the public market by a private equity buyer.

Manor Care shareholders will receive $67 a share, a 20% premium over the stock’s closing price April 10, the day before the company said it was putting itself up for sale, and a 2.6% premium over Friday’s close.

The total value of the deal, including assumed debt, is $6.3 billion, the company said.

Stable reimbursement from Medicare, the federal health insurance program for the elderly, and the value of underlying real estate made the company an attractive takeover target, analysts said.

“In addition to the basic fundamentals that are very good, [such] companies own their underlying real estate -- there is a lot of embedded value,” said Frank Morgan, an analyst at Jefferies.

The deal will be financed through a combination of commercial mortgage-backed securities, other debt financing and cash provided by Carlyle.

The remaining large players in the skilled nursing space include Kindred Healthcare Inc., Sun Healthcare Group Inc. and Skilled Healthcare Group Inc.

Private equity firms typically buy companies, cut costs and sell them later, borrowing about two-thirds of the money needed to finance their deals.

Private equity activity in the healthcare sector has accelerated since last year’s leveraged buyout of hospital chain HCA Inc. Nursing home chain Genesis HealthCare Corp. agreed to be purchased by private equity buyers in January, and Beverly Enterprises went private in 2005.

The steady cash flow nursing home operators produce is a big attraction for private equity firms that need the cash to pay down borrowed debt.

Shares of Toledo, Ohio-based Manor Care fell $1.19, or 1.8%, to $64.10.