April 25, 2018 / 5:17 PM / 3 months ago

Exclusive: ProMedica, Welltower in bid to acquire Quality Care Properties - sources

(Reuters) - Nonprofit hospital network operator ProMedica and healthcare-focused real estate investment trust Welltower Inc (WELL.N) have made a $2 billion offer to buy Quality Care Properties Inc (QCP.N), the soon-to-be owner of the second-largest U.S. nursing home chain, HCR ManorCare, people familiar with the matter said.

The deal would make ProMedica a national U.S. healthcare provider by allowing it to take on the assets of HCR ManorCare. Quality Care Properties won court approval earlier this month to pick up HCR ManorCare from bankruptcy.

ProMedica and Welltower’s offer values Quality Care Properties at around $20 per share, close to its current market value, the sources said on Wednesday.

The negotiations between the companies are ongoing, and there is no certainty that a deal will be reached, added the sources, who asked not to be identified because the matter is confidential.

ProMedica, Welltower and Quality Care Properties did not immediately respond to requests for comment.

Shares of Quality Care Properties rose 9.1 percent on the news to end at $22.70 on Wednesday, giving the company a market capitalization of $2.1 billion, as investors bet on a sweetened offer. Welltower shares ended trading down 1 percent at $50.52.

HCR ManorCare, which filed for bankruptcy in March, is one of many chains that struggled to make rent on leases since declining Medicaid and Medicare reimbursements started cutting into margins in 2012.

Quality Care Properties, which is HCR ManorCare’s landlord, spans 257 skilled nursing properties, 61 assisted living properties, a surgical hospital and medical office buildings in 29 states. HCR ManorCare has a network of more than 500 skilled nursing and rehabilitation centers, memory care communities, assisted living facilities, outpatient rehabilitation clinics, and hospice and home healthcare agencies.

Quality Care Properties has agreed to give up its status as a publicly traded real estate investment trust to take over HCR ManorCare, and has appointed a management team led by Guy Sansone, managing director at turnaround advisory firm Alvarez & Marsal, to oversee the planned sale of 74 skilled nursing facilities.

ProMedica is a nonprofit health system providing quality healthcare services to 28 counties in northwest Ohio and southern Michigan, with 13 hospitals, six ambulatory surgery centers and more than 300 other facilities.

Welltower, which has a market capitalization of $18.6 billion, invests in properties in the senior housing, post-acute care and outpatient medical sectors.

Reporting by Greg Roumeliotis, Jessica DiNapoli and Tracy Rucinski in Chicago; Additional reporting by Carl O'Donnell in New York; Editing by Matthew Lewis

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