Combined company to have a diversified
portfolio of 564 investments across 43 states and
Canada
Sabra Health Care REIT, Inc. (Nasdaq:SBRA) (Nasdaq:SBRAP) and Care
Capital Properties, Inc. (NYSE:CCP) announced today that they have
entered into a definitive agreement pursuant to which the two
companies will combine in an all-stock merger to create a premier
healthcare REIT. The combined company is expected to have a pro
forma total market capitalization of approximately $7.4 billion and
an equity market capitalization of approximately $4.3 billion.
Under the terms of the agreement, CCP
shareholders will receive 1.123 shares of Sabra common stock for
each share of CCP common stock they own. Upon closing of the
merger, Sabra shareholders are expected to own approximately 41%
and the former CCP shareholders are expected to own approximately
59% of the combined company. The merger is subject to customary
closing conditions, including receipt of the approval of both Sabra
and CCP shareholders. The parties currently expect the transaction
to close during the third quarter of 2017. The all-stock merger is
intended to be a tax-free transaction.
TRANSACTION HIGHLIGHTS
The merger of Sabra and CCP creates significant
financial and operational benefits:
- Creates a premier healthcare REIT: The merger
brings together two high quality companies with complementary
properties creating a unique healthcare portfolio of 564
investments. The combined company will have 70 high quality
relationships across 43 states and Canada, creating enhanced growth
opportunities to strategically partner with top operators.
- Increased diversification and scale: The
combination of Sabra’s and CCP’s portfolios will significantly
improve both REITs’ tenant diversification by operator, geography
and asset type. No one tenant will represent more than 11% of the
annualized net operating income of the combined company after
giving effect to Sabra’s previously announced Genesis dispositions
and CCP’s previously announced closing on the behavioral
hospitals.
- Outstanding credit metrics and cost of capital
advantage: The combined company expects to have modest
leverage, excellent liquidity and strong fixed charge coverage,
with pro forma investment grade credit metrics. Sabra and CCP
believe the greater scale will promote investor interest and
increased shareholder liquidity, positioning the combined company
to benefit from a more attractive cost of capital, allowing it to
successfully compete for future investment
opportunities.
- Immediately accretive: The merger is expected
to generate annual cost savings of approximately $20 million. The
transaction is expected to be immediately accretive to Sabra’s FFO
and AFFO per share and provide the combined company with an
attractive earnings growth profile. CCP shareholders will gain
immediate benefits through the exchange ratio and improved
opportunity for superior shareholder returns through increased
growth in the combined company.
- Poised for growth and value creation: The
transaction adds to both REITs’ stable asset bases, and positions
the combined company to create a balanced portfolio in the assisted
living, independent living and skilled nursing facility asset
classes. The more extensive asset base gives the combined
company additional flexibility to recycle capital and actively
manage the portfolio without sacrificing earnings growth.
- Attractive dividend: On a combined basis the
dividend will be well covered and be an important and attractive
part of the overall shareholder return.
Rick Matros, CEO and Chairman of Sabra stated:
"We are excited to announce this transformative transaction that
brings together two highly complementary portfolios in a merger we
believe to have considerable benefits for all stakeholders. We have
reshaped, diversified and enhanced the Sabra portfolio and this
transaction represents a logical and substantial next step on that
journey. Our balance sheet and access to capital will enable us to
continue investing in senior housing assets to balance our
portfolio mix, as we did after our spin-off. The increased scale
and portfolio diversification, strengthened balance sheet and
earnings profile delivered through the merger position us to
capitalize on the opportunity set in front of us in an industry
that continues to have attractive fundamentals."
Raymond Lewis, CEO of CCP stated: "This is an
outstanding outcome for the shareholders of both companies.
Since becoming a public company in August of 2015, CCP has worked
hard to reposition our portfolio for success and growth with
strategic operators. The combined company will have a diversified
portfolio of quality operators and assets, with strong free cash
flow, a rock solid balance sheet and a highly competitive cost of
capital. This solid foundation will enable it to compete and win in
the dynamic and growing healthcare real estate market. Rick and his
team have a strong track record of delivering on their commitments
and producing results and I look forward to supporting them as they
continue with this exciting next step."
LEADERSHIP AND ORGANIZATION
The current management team of Sabra will lead
the combined company, with Rick Matros to serve as Chairman and
CEO, Harold Andrews as CFO and Talya Nevo-Hacohen as CIO. The Sabra
Board of Directors will be expanded to 8 members, adding CCP’s
current CEO Raymond Lewis and two additional directors from CCP.
Upon completion of the merger, the company will operate under the
Sabra name and its common stock will be listed under the ticker
symbol SBRA (NASDAQ). The company will be headquartered in Irvine,
California.
ADVISORS
UBS Investment Bank is acting as financial
advisor to Sabra and O’Melveny & Myers LLP and Fried, Frank,
Harris, Shriver & Jacobson LLP are acting as legal advisors to
Sabra. BofA Merrill Lynch is acting as lead financial advisor and
Barclays is acting as financial advisor to CCP. Sidley Austin LLP
is acting as legal advisor to CCP.
CONFERENCE CALL AND WEBCAST
The companies will host a conference call with a
simultaneous webcast on Monday, May 8, 2017 at 8:30am EDT to
discuss the merger. Participants will include Sabra’s Chief
Executive Officer and Chairman Rick Matros, Sabra’s Chief Financial
Officer Harold W. Andrews Jr., Sabra’s Chief Investment Officer
Talya Nevo-Hacohen, CCP’s Chief Executive Officer Raymond J. Lewis
and CCP’s Chief Financial Officer Lori B. Wittman. The conference
call can be accessed by dialing (888) 286-2314 and entering the
passcode SABRA. The webcast URL is
http://edge.media-server.com/m/p/dp7isfr4. CCP will not be holding
their earnings conference call previously scheduled for May 9,
2017.
A replay of the conference call will also be
available for 30 days following the call, by dialing (888) 203-1112
and entering the passcode 4977559. An investor presentation
regarding the transaction, a transcript of the call and the webcast
replay, including a podcast format, will be posted when available
on the respective companies’ websites under the Investor Relations
section.
ABOUT SABRA
Sabra Health Care REIT, Inc. (NASDAQ:SBRA), a
Maryland corporation, operates as a self-administered, self-managed
real estate investment trust (a "REIT") that, through its
subsidiaries, owns and invests in real estate serving the
healthcare industry. Sabra leases properties to tenants and
operators throughout the United States and Canada.
ABOUT CCP
Care Capital Properties, Inc. is a healthcare
real estate investment trust with a diversified portfolio of
triple-net leased properties, focused on the post-acute sector.
CCP’s skilled management team is fully invested in delivering
excellent returns by forging strong relationships with
shareholders, operators, and employees.
ADDITIONAL INFORMATION ABOUT THE MERGER
AND WHERE TO FIND IT
This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. This communication may be
deemed to be solicitation material in respect of the proposed
merger of CCP with a wholly owned subsidiary of Sabra. In
connection with the proposed merger, Sabra intends to file a
registration statement on Form S-4 with the U.S. Securities and
Exchange Commission ("SEC"), which will include a joint proxy
statement/prospectus with respect to the proposed merger. After the
registration statement is declared effective, Sabra and CCP will
each mail the definitive joint proxy statement/prospectus to their
respective stockholders. The definitive joint proxy
statement/prospectus will contain important information about the
proposed merger and related matters. STOCKHOLDERS OF SABRA AND CCP
ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS,
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SABRA, CCP AND THE
MERGER. Stockholders will be able to obtain copies of the
joint proxy statement/prospectus and other relevant materials (when
they become available) and any other documents filed with the SEC
by Sabra and CCP for no charge at the SEC’s website at www.sec.gov.
Copies of the documents filed by Sabra with the SEC will be
available free of charge on Sabra’s website at www.sabrahealth.com,
or by directing a written request to Sabra Health Care REIT, Inc.,
18500 Von Karman Avenue, Suite 550, Irvine, CA 92612, Attention:
Investor Relations. Copies of the documents filed by CCP with the
SEC will be available free of charge on CCP’s website at
www.carecapitalproperties.com, or by directing a written request to
Care Capital Properties, Inc., 191 North Wacker Drive, Suite 1200,
Chicago, Illinois 60606, Attention: Investor Relations.
PARTICIPANTS IN THE
SOLICITATION
Sabra and CCP, and their respective directors
and executive officers and certain other employees, may be deemed
to be participants in the solicitation of proxies in respect of the
transactions contemplated by the merger agreement. Information
concerning the ownership of Sabra securities by Sabra’s directors
and executive officers is included in their SEC filings on Forms 3,
4, and 5, and additional information about Sabra’s directors and
executive officers is also available in Sabra’s proxy statement for
its 2017 annual meeting of stockholders filed with the SEC on April
25, 2017 as well as its Form 10-K filed with SEC for the year ended
December 31, 2016. Information concerning the ownership of CCP
securities by CCP’s directors and executive officers is included in
their SEC filings on Forms 3, 4, and 5, and additional information
about CCP’s directors and executive officers is also available in
CCP’s proxy statement for its 2017 annual meeting of stockholders
filed with the SEC on April 7, 2017 as well as its Form 10-K filed
with SEC for the year ended December 31, 2016. Other information
regarding persons who may be deemed participants in the proxy
solicitation, including their respective interests by security
holdings or otherwise, will be set forth in the joint proxy
statement/prospectus relating to the proposed merger when it
becomes available and is filed with the SEC. These documents
can be obtained free of charge from the sources indicated
above.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements contained herein, including
statements about Sabra’s proposed merger with CCP, the expected
impact of the proposed merger on Sabra’s financial results, Sabra’s
ability to achieve the synergies and other benefits of the proposed
merger with CCP and Sabra’s and CCP’s strategic and operational
plans, contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to future events or future financial performance.
We generally identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential," "continue" or
"looks forward to" or the negative of these terms or other similar
words, although not all forward-looking statements contain these
words.
Forward-looking statements are based upon our
current expectations and assumptions of future events and are
subject to risks and uncertainties that could cause actual results
to differ materially from those indicated by such forward-looking
statements. Some of the risks and uncertainties that could cause
actual results to differ materially include, but are not limited
to: the possibility that the parties may be unable to obtain
required stockholder approvals or regulatory approvals or that
other conditions to closing the transaction may not be satisfied,
such that the transaction will not close or that the closing may be
delayed; the potential adverse effect on tenant and vendor
relationships, operating results and business generally resulting
from the proposed transaction; the proposed transaction will
require significant time, attention and resources, potentially
diverting attention from the conduct of Sabra’s business; the
amount of debt that will need to be refinanced or amended in
connection with the proposed merger and the ability to do so on
acceptable terms; changes in healthcare regulation and political or
economic conditions; the anticipated benefits of the proposed
transaction may not be realized; the anticipated and unanticipated
costs, fees, expenses and liabilities related to the transaction;
the outcome of any legal proceedings related to the transaction;
and the occurrence of any event, change or other circumstances that
could give rise to the termination of the transaction
agreement. Additional information concerning risks and
uncertainties that could affect Sabra’s business can be found in
Sabra’s filings with the Securities and Exchange Commission,
including Item 1A of its Annual Report on Form 10-K for the year
ended December 31, 2016. Additional information concerning risks
and uncertainties that could affect CCP’s business can be found in
CCP’s filings with the Securities and Exchange Commission,
including Item 1A of its Annual Report on Form 10-K for the year
ended December 31, 2016.
We undertake no obligation to revise or update
any forward-looking statements, except as required by law. Readers
are cautioned not to place undue reliance on any of these
forward-looking statements.
CONTACT:
Investor & Media Inquiries: 1-888-393-8248 or investorinquiries@sabrahealth.com, and
Lori Wittman
Executive Vice President and Chief Financial Officer
Care Capital Properties, Inc.
1-312-881-4702
lwittman@carecapitalproperties.com
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