Assisted Living Merger May Set Off More Deals

Brookdale is acquiring Seattle-based Emeritus for about $1.4 billion in an all-stock deal. The deal, announced late Thursday, valued Emeritus at about $28.41, a 30% premium over Emeritus’s Wednesday close. With debt, the deal was valued at $2.8 billion.

The deal, expected to close in the third quarter, would mean Brookdale, headquartered in Nashville, Tenn., would have 1,161 communities in in 46 states, with a 10% national market share. It now operates 649 communities in 36 states. Emeritus has 512 facilities in 45 states.

Brookdale operates independent living, assisted living and dementia-care facilities. With the deal, Brookdale would double the units it operates in California, New York, New Jersey and Massachusetts.

Emeritus shares were up $7.81, or 36%, to $29.26 on heavy volume Friday. Brookdale was up 94 cents, or 3.1%, to $31.02 after reaching a five-year high of $32.35. The bidding for Emeritus suggests speculation another bidder might emerge.

It also set off betting on more mergers with shares of four other assisted-living or related companies moving higher. Capital Senior Living Corp. (NYSE: CSU) shares were the biggest gainers, up 4.7% to $24.12. The Dallas company operates 112 communities in 26 states.

The others were:

Five Star Quality Care Inc. (NYSE: FVE) was up 2.5% to $5.81. The Newton, Mass., company operates more than 200 communities in 30 states.

Skilled Healthcare Group Inc. (NYSE: SKH) was up 2.7% to $4.93. The California company specializes in long-term care facilities in California, Texas, Kansas, Missouri, New Mexico, Nevada and Iowa. These include assisted living, nursing homes, hospice-care facilities and rehabilitation services.

Senior Housing Properties Trust (NYSE: SNH), up 1.9% to $21.36, is a real-estate investment trust based in Newton, Mass. It owns 396 properties in 40 states and Washington, D.C. It recently bought two biotechnology office buildings in Boston for $1.1 billion.