Ventas Inc. (NYSE:VTR) said it agreed to acquire smaller rival Nationwide Health Properties Inc. (NYSE:NHP) for $7.4 billion or $44.99 a share in stock, creating one of the largest publicly traded real estate investment trusts (REITs) in the United States.
The combination creates increased scale and liquidity, improved asset class, better credit profile and higher potential for dividend growth, Ventas said. The combined company will have over 1,300 total assets in 47 states, the District of Columbia and two Canadian provinces.
NHP invests primarily in healthcare real estate in the United States. As of December 31, 2010, NHP's portfolio of properties, including mortgage loans and properties owned by unconsolidated joint ventures, totaled 667 properties.
Under the terms of the agreement, each share of NHP will be converted into 0.7866 shares of Ventas.
The purchase price represents a premium of about 15 percent over NHP’s closing price of $38.96 on Friday.
The combined company will have a unique opportunity for continued external growth, said Ventas Chief Executive Officer Debra Cafaro, who will continue to serve as Chairman and CEO of the combined company.
The combined company will have a pro forma equity value of about $17 billion, pro forma enterprise value of around $23 billion and over 100 customer relationships.
Ventas expects its shareholders to own around 65 percent of the combined company, while NHP shareholders the remaining 35 percent.
Ventas expects the transaction add to its normalized Funds From Operations (FFO) and Funds Available for Distribution.
The deal is expected to be completed in the third quarter.
Separately, NHP reported a 13 percent rise in adjusted FFO per share for the fourth quarter to $0.60, while revenue rose 20 percent to $116 million.
Shares of Ventas, with a market cap of $9.1 billion, ended Friday's regular trading at $57.19.