Omega Healthcare Investors to Acquire Aviv REIT for $3B

Omega Healthcare Investors Inc (NYSE:OHI) announced its agreement to acquire Aviv REIT Inc (NYSE:AVIV) for $3 billion. According to the company, the merger would create a premier publicly traded pure-play skilled nursing facility real estate investment trust (REIT).

Transaction details

Under the terms of the agreement, the shareholders of Aviv REIT Inc (NYSE:AVIV) will receive a fixed exchange ratio of 0.90 shares of Omega Healthcare Investors Inc (NYSE:OHI) for every share of Aviv common stock they own.

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The consideration is equivalent to $34.97 of Omega stock for each Aviv share based on the closing price of Omega Healthcare Investors Inc (NYSE:OHI) yesterday, October 30. The price represents a 16.2% premium to the closing price of the stock Aviv REIT Inc (NYSE:AVIV) on the same day.

The shareholders of Omega Healthcare Investors Inc (NYSE:OHI) will own approximately 70% while the shareholders of Aviv REIT Inc (NYSE:AVIV) together with the limited partners of Aviv Healthcare Properties Limited will beneficially own around 30% of the combined company.

The combined company is expected to benefit from approximately $9 million of general and administrative cash and additional savings from borrowing costs. It will have 874 Properties across 41 states and 83 operator relationships after the merger.

Omega Healthcare & Aviv will have unrivaled resources

Taylor Pickett, CEO of Omega Healthcare Investors Inc (NYSE:OHI) said, “This merger is consistent with Omega’s long history of executing value-creating transactions.”

Pickett added that the combined company will have unrivaled resources to pursue attractive acquisition and development opportunities. It will also have human and capital resources to engage in new operator relationships for continued external growth.”

On the other hand, Craig Bernfield, chairman and CEO of Aviv REIT Inc (NYSE:AVIV), said, “This is a strategic combination of two best-in-class companies that have been the most dedicated and successful investors in the skilled nursing sector over the past few decades. The combined company will now be positioned to be the premier consolidator of SNF real estate for years to come.”

Following the completion of the transaction, Picket will continue to serve as CEO while Bernfield will join the board of directors of the combined company.

The board of directors of Omega Healthcare Investors Inc (NYSE:OHI) and Aviv REIT Inc (NYSE:AVIV) unanimously approved the transaction, which is still subject to the approval of shareholders and customary closing conditions. The deal is expected to close in the first quarter of 2015.