NEW YORK (TheStreet) -- Brookdale Senior Living (BKD) hit a five-year high of $32.35 as of 10 a.m. EST on Friday after the company agreed to acquire Emeritus (ESC) for approximately $1.4 billion in stock.
Brookdale will build a series of housing units for the elderly in 46 states across the U.S., according to Bloomberg. Investors in Emeritus, a Seattle-based company, will receive 0.95 shares of Brookdale for each share that they own, which values Emeritus at approximately $28.56 per share. The total value of the transaction, including debt, is approximately $2.8 billion.
The deal should solidify Brookdale's status as the U.S. population continues to age and the number of residents in senior living communities increases. The Brentwood, Tenn.-based company said the deal would allow it to construct the "only national full-spectrum senior-living solutions company" with more than 1,100 locations nationwide.
"This combination will improve our ability to deliver the best high-quality solutions for the growing demographic of aging seniors and their families," said Brookdale CEO Andy Smith in the companies' statement. "With still only 10 percent market share post-merger, we are confident of our prospects for driving further long-term revenue growth."
Smith will serve as CEO of the new combined company.
TheStreet Ratings team rates BROOKDALE SENIOR LIVING INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROOKDALE SENIOR LIVING INC (BKD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."