Nationwide Health Beats, Acquired by Ventas

(Ventas acquiring Nationwide Health Properties report updated with analyst commentary.)

NEWPORT BEACH, Calif. (TheStreet) -- Nationwide Health Properties(NHP) soared Monday after the real estate investment trust beat quarterly expectations, increased its dividend and announced it would be acquired by Ventas(VTR).

Nationwide Health said Ventas will acquire all its outstanding shares in a stock-for-stock transaction valued at $7.4 billion.

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Under the terms of the deal, Nationwide Health stockholders will receive a fixed exchange ratio of 0.7866 Ventas shares for each share of NHP common stock they own, or the equivalent of $44.99 of Ventas stock for each NHP share, based on Friday's closing prices.

Once the merger is completed, Ventas shareholders are expected to own 65%, and NHP holders 35%, of the combined senior housing and healthcare properties REIT.

The merger will create the largest healthcare REIT in the U.S.

NHP shares surged 10.3% to $42.99 at midday Monday amid heavy volume. Nearly 6 million shares were in play just halfway through the day's session, compared with their average daily volume of 854,000. Ventas shares lost 2.6%, with nearly 3 million shares in play compared with their average daily volume of just 1.2 million.

Kathleen Shanley, senior investment grade analyst at Gimme Credit, noted that the healthcare REIT sector is "in the midst of a consolidation boom."

Late last year Ventas announced its acquisition of privately-held Atria Senior Living for $3.1 billion in stock, cash and assumed debt. In July it acquired medical office building operator Lillibridge Healthcare Services for $381 million. And in December, Ventas purchased minority interests in 58 properties from Sunrise Senior Living for $186 million.