Brookdale, Emeritus to merge in $2.8 billion deal

Brookdale Senior Living Inc. of Nashville, Tenn., and Emeritus Corp. of Seattle have announced plans to merge in a $2.8 billion deal that includes $1.4 billion of Emeritus mortgage debt.

The boards of both companies unanimously approved the deal, which is expected to be completed in the third quarter of this year, subject to regulatory and shareholder approvals as well as other customary closing conditions.

The combined company, to be known as Brookdale and to be based at Brookdale's current headquarters in Nashville, will offer independent living, assisted living, dementia care, skilled nursing, outpatient therapy, home health and hospice care. The transaction is expected to expand Brookdale’s unit capacity by more than two-thirds to a total of approximately 112,700 units in 1,161 communities in 46 states. The portfolio will include properties in 330 markets, near 80 percent of the U.S. population.

Brookdale's current CEO, Andy Smith, will serve as CEO of the merged entity, and Mark Ohlendorf of Brookdale will continue in his current roles of president and chief financial officer.

"In an industry with very attractive long-term growth dynamics, this strategic merger creates the first national, predominantly private-pay-based senior living solutions company," Smith said in a statement. "This combination will improve our ability to deliver the best, high-quality solutions for the growing demographic of aging seniors and their families."

The new company will represent 10 percent of the market, Smith added, allowing room for expansion while enabling the merging companies to realize "significant" operating efficiencies and further investment in service delivery through training, education and physical enhancements to existing properties.

Emeritus President and CEO Granger Cobb is expected to join the Brookdale Board of Directors and will continue in a consulting role with the company. Certain members of Emeritus’ senior management team are expected to continue in senior positions after the merger.

"Combining and maximizing the significant strengths of our two outstanding companies is certain to be of tremendous advantage in supporting our customers and their families as they face the challenges of aging," Cobb said in a statement. "We are also pleased that Emeritus shareholders will realize compelling and immediate value, as well as the opportunity to participate in the upside potential inherent in this powerful combination.”

Under the agreement, Emeritus shareholders will receive 0.95 shares of Brookdale common stock in exchange for each share of their Emeritus common stock. Based on the closing price of each company’s common stock on Feb. 19, this exchange ratio implies a 32 percent premium on Emeritus’ shares. Emeritus shareholders will own about 27 percent of the new company once the merger is complete, Smith said.

Brookdale Senior Living Inc. currently operates independent living, assisted living and dementia-care communities and continuing care retirement centers, with 649 communities in 36 states and the ability to serve approximately 67,000 residents. Through its ancillary services program, the company also offers a range of outpatient therapy, home health, personalized living and hospice services.

Emeritus Senior Living currently is an assisted living and memory care provider with the ability to serve nearly 54,000 residents. More than 31,000 employees support more than 500 communities throughout 45 states coast to coast.

More information on the transaction can be found at www.emeritusforward.com or www.brookdaleforward.com.

Read the Emeritus press release.

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