Ventas buys Ardent Healthcare for $1.75 bn
07 April 2015
Ventas Inc, a leading real estate investment trust (REIT) in the US, has agreed to acquire hospital operator Ardent Medical Services Inc for approximately $1.75 billion in an all-cash deal, as it looks to expand in the hospital real estate business in three key markets.
Simultaneously, Ventas is planning to spin-off Ardent's hospital operations from its real estate business, by selling it to a newly formed investment trust owned by Ardent. Ventas will own up to 9.9 per cent in the entity and enter into a long-term lease agreement with it.
Nashville, Tennessee-based Ardent, owned by private equity funds, is one of the major hospital operators in the US. It owns hospitals and multi-specialty physician groups in Texas, Oklahoma and New Mexico. The company generates annual revenue of approximately $2 billion, with over half of it coming from private commercial payers.
Through the acquisition, Ventas will own ten high-quality hospitals and related real estate operated by Ardent under the names BSA Health System in Amarillo, Hillcrest HealthCare System in Tulsa, and Lovelace Health System in Albuquerque. These assets comprise approximately 3.2 million square feet and 2,045 beds.
Ventas chairman and chief executive officer Debra Cafaro said: ''This transaction builds upon our excellent track record of executing innovative and value-creating opportunities, and solidifies our leadership position in healthcare real estate.
''The addition of Ardent's platform, which includes high-quality assets with significant market share in three key markets, and a highly-regarded hospital management team, creates a strong avenue for growth in the attractive hospital real estate market,'' Cafaro added.
The deal diversifies Ventas' hospital real estate by property type and operator, and provides Ventas with new investment opportunities by participating in Ardent's future hospital acquisitions.
There will be no change in Ardent's management team or headquarters post acquisition.
Ardent will be entitled to distribute up to $75 million in excess cash to its shareholders.
Under the terms of the spin-off, Ventas shareholders will get one share of the spin-off for every four shares they currently own.
The transaction is expected to close mid-year and the spin-off is expected to close in the second half of 2015, subject to customary conditions and regulatory approvals.
Ventas intends to fund the deal with cash in hand, loan repayments, debt and equity.
The deal is expected to be accretive to Ventas by 8 to 10 cents in the first full year after close.
Chicago-based Ventas is one of the biggest REITs with a diverse portfolio of over 1,600 assets in the US, Canada and the UK. Its assets include seniors housing communities, medical office buildings, hospitals and other properties.
For the year ended 2014, Ventas reported revenue of $3.1 billion and net profit of $476 million.
Further to the news, shares of Ventas went up 5 per cent to $76.90 yesterday in New York.
UBS Investment Bank is serving as exclusive financial advisor to Ventas, while Ardent is advised by Barclays.