Brentwood, TN-based Diversicare Healthcare Services will be acquired by New York-based retirement assets manager DAC Acquisition, the company announced Friday morning. The transaction is expected to close in the fourth quarter.
Under terms of the merger agreement, DAC will acquire all of the outstanding shares of common stock of Diversicare for $10.10 per share in cash. The amount represents a premium of approximately 256% to the closing price of $2.84 for Diversicare’s common stock on Aug. 19, the last trading day before announcement of the DAC acquisition proposal, and a premium of approximately 210% to the 90-day volume weighted average trading price of $3.26 per share.
“After due consideration, the board of directors concluded that this transaction was clearly in the best interests of our stockholders,” Chad McCurdy, chairman of Diversicare’s Board of Directors, said in a statement. “The board and I highly value our management team and appreciate their diligent focus through the pandemic. Their efforts to reposition our company the past few years have led us to this opportunity.”
As of June 30, Diversicare’s operations included 397 licensed assisted and residential living beds as well as 61 skilled nursing centers with 7,250 licensed nursing beds, according to a filing with the Securities and Exchange Commission.
DAC is a privately held limited liability company of which Ephram Lahasky is manager. Lahasky, who has owned and operated ambulance and ambulette services since 1990, is affiliated with more than 100 owned and/or leased skilled nursing and similar centers in more than 20 states.
“We could not be more pleased to be joining forces with Mr. Lahasky and his organization, with his extensive experience in the long-term care industry,” Diversicare CEO James R. McKnight Jr. said in a statement. “Together, we look forward to continuing to build on the strong momentum Diversicare generated over the past year and share our knowledge of clinical and operational depth with his current portfolio of over 100 skilled nursing facilities.”
Following completion of the transaction, Diversicare will become a privately held company, wholly owned by DAC Acquisition, and no longer will be traded over the counter or subject to SEC reporting obligations.
“We are excited by the opportunity to add Diversicare’s centers to our portfolio and to have the opportunity to have access to their team and operating platform. I have closely followed Diversicare’s corporate progress from the perspective of a stockholder and as an operator,” Lahasky said in a statement. “The possibilities available to our existing portfolio and Diversicare’s portfolio by this combination are very encouraging. DAC Acquisition LLC views this transaction as a unique opportunity to grow together in the healthcare space with Diversicare’s professional leadership team and dedicated staff who care for their thousands of patients daily.”
The merger agreement includes a “go-shop” period, during which Diversicare and its board can actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals during a 35-day period following the execution date of the definitive agreement. Diversicare directors, however, collectively hold approximately 33.4% of the outstanding shares of Diversicare and have entered into a voting agreement under which they have agreed to vote all of their Diversicare shares in favor of the transaction.
As the McKnight’s Business Daily previously reported, Diversicare shares more than doubled in value last Friday, the day after the announcement of DAC’s buyout offer. In a press release issued that day, Diversicare said that it was reviewing the offer and that “[t]he company has not established a definitive timeline to complete this review, and no decision has been reached at this time. 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 previous regulatory filing, 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.”
