Shares of Diversicare Healthcare Services more than doubled in value last Friday following the announcement Thursday that MCS Plan and its manager Ephram “Mordy” Lahasky, doing business as DAC Acquisition, announced their intentions to take over control of the company.
As of a June 30 Securities and Exchange Commission filing, Diversicare provides long-term care services to residents and patients in 61 skilled nursing facilities with a collective 7,250 skilled nursing beds. The long-term care provider owns 15 of the SNFs it operates and leases the other 46, ranging in size from 50 to 320 licensed nursing beds. Additionally, the company has 397 licensed assisted and residential living beds.
DAC, a New York-based retirement assets manager, proposes to acquire all of the outstanding common stock of the Brentwood, TN-based long-term care provider for $10.10 per share, or approximately $70 million, to take over the company. The proposal is subject to other material conditions, according to a Diversicare press release.
According to Seeking Alpha, a crowd-sourced content service for financial markets, “a merger arbitrage opportunity appears to exist with a possible 28.63% annualized return.”
Diversicare confirmed that its board of directors has been in talks with DAC Acquisition to determine the appropriate course of action, but no decision has been made. The board has retained Brentwood Capital Advisors as its financial adviser.
“The company has not established a definitive timeline to complete this review, and no decision has been reached at this time,” according to Diversicare. “There can be no assurance that the review being undertaken will result in a business combination or a path different from the company’s current strategic plan.”
In a filing with regulators last week, the Nashville Post reported, Lahasky said he “believes that centralization of management and the cost efficiencies from the amalgamation of the Diversicare facilities with his existing portfolio will enable them to deliver additional resources to the facilities through more efficient purchasing of goods and contracting for services.”
