JER, Formation increase Genesis bid to $1.7bn

Private equity real estate firm JER Partners and Formation Capital are increasing their bid for the long-term health care company to $1.7bn.

McLean, Virginia-based JER Partners and healthcare investor Formation Capital have upped their offer for publicly traded long-term care provider Genesis Health Care. They are now offering $64.25 per share, increasing the deal value to $1.7 billion (€1.3 billion), up from the $1.3 billion the two firms offered earlier this year. The transaction includes the assumption of $475 million in debt. 

The firms first announced the deal in January, offering $63 per share for the company, a premium of 31 percent over the average share price for the previous month. JER and Formation are now paying a premium of 33.7 percent over the share price for the same period. The new proposal will be voted on by Genesis shareholders in early May.

In a statement, Cia Buckley, head of JER’s US fund business, said this was the firm’s final offer. “[I]t is important to highlight that $64.25 is our ‘best and final’ price,” she said. “If Genesis shareholders do not vote in favor of this transaction at this price, then JER and Formation will focus our attention on other attractive acquisition opportunities.”

Genesis, which is headquartered in Kennett Square, Pennsylvania, operates more than 200 long-term care centers and assisted-living facilities in 13 states in the Eastern US. 

Last July, JER and Formation teamed up to acquire Tandem Health Care, a Florida-based long-term care provider, for $620 million. The seller in that deal was New York private equity firm Behrman Capital. At the time, Tandem operated 78 long-term care facilities in twelve states.  

Prior to that, in June, JER acquired $75 million worth of convertible preferred securities from Chicago-based Aviv Healthcare Properties, which financed the acquisition of triple net-leased healthcare facilities. Aviv is using the capital to acquire single assets and portfolios, including 14 skilled nursing facilities acquired at the time of the deal.

Alpharetta, Georgia- and Jenkintown, Pennsylvania-based Formation is focused solely on the nursing home sector. JER Partners, the private equity real estate arm of JE Robert Companies, closed its last US-focused opportunity fund closed on $823 million in 2004.