NEW YORK, N.Y. – Real estate investment trust Ventas is purchasing American Realty Capital Healthcare Trust Inc. in a cash-and-stock deal that the companies valued at about $2.6 billion.
The companies each own medical care offices as well as other real estate properties.
Ventas Inc. will pay $11.33 per ARC Healthcare share, a 14 per cent premium to its Friday closing price of $9.95.
ARC Healthcare shareholders can choose to receive 0.1688 Ventas common shares or $11.33 in cash for each common share of ARC Healthcare they own. The cash portion of the deal is subject to a cap of 10 per cent of ARC Healthcare’s outstanding shares.
ARC Healthcare stockholders are expected to own approximately 8 per cent of Ventas’ 321 million outstanding shares once the acquisition is complete.
Both companies unanimously approved the transaction, which is targeted to close in the fourth quarter. It still needs approval from ARC Healthcare stockholders.
ARC Healthcare’s stock surged $1.10, or 11.1 per cent to $11.05 in morning trading Monday. Ventas shares fell $1.45, or 2.2 per cent, to $65.35.
Ventas also announced that it is buying 29 independent living seniors housing communities in Canada from Holiday Retirement for $980 million Canadian dollars (approximately $900 million) in cash. That deal is expected to close in the third quarter.
The transactions are expected to be immediately add to Ventas’s 2015 normalized funds from operations by at least 10 cents per share. Funds from operations, or FFO, are considered key to measuring the financial performance of real estate investment trusts. FFO adds items such as amortization and depreciation back to net income.