Genesis HealthCare to buy rival Sun Healthcare for $275 million

Posted: June 21, 2012

Genesis HealthCare L.L.C., of Kennett Square, agreed to buy Sun Healthcare Group Inc. for $8.50 per share in a cash transaction valued at about $275 million, including the assumption of debt.

Once the deal is closed, scheduled for the fall, Genesis would add Sun's 190 skilled nursing centers and other health facilities in 46 states. The combined organization would have more than 420 centers and 75,000 employees and generate $4 billion in annual revenue.

The companies said that the purchase price represented a 43 percent premium to Sun's closing price of $5.94 on Tuesday. The deal was announced after U.S. markets had closed Wednesday.

Privately held Genesis, which provides skilled nursing care through more than 200 centers in 13 Eastern states, agreed to pay a $20 million breakup fee should the deal not close.

Should Sun accept a better offer, it would be required to pay a $6.9 million fee plus up to $1 million to cover Genesis' expenses.

Both health-care providers have either sold or spun off their real estate assets to publicly traded real estate investment trusts within the last 19 months.

According to its most recent annual report, Irvine, Calif.-based Sun had a net loss of $291.8 million, or $11.19 per share, on total net revenues of $1.93 billion in 2011. — Mike Armstrong

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