Ventas Inc. (VTR, Financial) has agreed to acquire privately held Ardent Medical Services and Ardent Health Services for $1.75 billion in an all cash transaction. Ardent Medical Services is a provider of health care services and is one of the tenth largest for profit hospital companies in the United States. Ventas Inc. has signed a definitive agreement to acquire all of Ardent Medical's shares from Welsh, Carson, Anderson & Stows and other shareholders.
CEO of Ventas' statement on the acquisition
Debra Cafaro said, "This transaction builds upon our excellent track record of executing innovative and value-creating opportunities and solidifies our leadership position in healthcare real estate." He went on to say, "The addition of Ardent's platform, which includes high-quality assets with significant market share in three key markets, and a highly regarded hospital management team, creates a strong avenue for growth in the attractive hospital real estate market. The transaction also increases our diversification by property type and operator."
Overview of the acquisition
After the deal closes in the middle of the year, Ventas said that it would separate Ardent Health Services' hospital operations from its own real estate operations and sell the hospital operations to one or more newly formed entities. The transaction will add 14 high-quality hospitals to its portfolio. The newly added hospitals to Ventas portfolio will enhance the firms normalized funds from operations by eight cents to ten cents per share during the first year after the acquisition. Ardent will be entitled to distribute up to $75 million in excess cash to its shareholders.
REIT spinoff
The REIT plans to separate Ardent's operating business from its real estate portfolio and sell to a new entity owned my Ardent Management and Ventas will have a 9.9% stake as well. The two feel enter into long-term lease agreement. REIT spinoff will comprise 355 skilled nursing facilities and other health care assets operated by 44 regional or local care provides. The average lease agreement doesn't expire for 10 years. It is expected to generate funds from operations of $240 to $245 million in its first year of operations.
