Brookdale, Emeritus Create Senior Living Behemoth

NEW YORK (The Deal) -- Brookdale Senior Living (BKD)BKD and Emeritus (ESC)ESC are merging to create the first national senior living services company, with business in 46 states, the companies said Thursday.

The merger's transaction value totals $2.8 billion, and includes $1.4 billion of Seattle-based Emeritus mortgage debt.

Emeritus' shareholders will receive 0.95 shares of Brookdale common stock in exchange for each Emeritus share. This implied a 32% premium on Emeritus share price at closing Feb. 19.

Nashville-based Brookdale said the merger is expected to have a neutral impact on its cash from facility operations in the first year of combined operations, growing to exceed $0.40 per share of accretion for the third year. The parties said they expect the deal to close in the third quarter.

"In an industry with very attractive long-term growth dynamics, this strategic merger creates the first national, predominantly private-pay based, senior living solutions company," Brookdale CEO Andy Smith said in a statement. "This combination will improve our ability to deliver the best, high quality solutions for the growing demographic of aging seniors and their families."

Smith will become CEO of the merged company, with Mark Ohlendorf as president and chief financial officer. Granger Cobb, now CEO of Emeritus, will join the board and continue in a consulting role. Corporate headquarters will remain in Nashville.

Brookdale's unit capacity will expand by more than two-thirds, adding 10 states and boosting its presence in several high-population states, including California and New York.

It will create one of the largest owned senior housing real estate portfolios in the country, with more than 1,100 communities post-merger, Smith said.

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