NEW YORK (TheStreet) -- Emeritus (ESC) was soaring 36.25% to $29.23 on Friday morning after Brookdale Senior Living (BKD) agreed to acquire the company for approximately $1.4 billion in stock in a deal valued at approximately $2.8 billion, including debt.
The deal values the Seattle-based company at approximately at $28.56 per share, as investors in Emeritus will receive 0.95 shares of Brookdale for each share that they own.
Brookdale will build more than 1,100 locations for the elderly in 46 states across the U.S., according to Bloomberg. 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."
"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 EMERITUS CORP as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMERITUS CORP (ESC) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."