NHC senior vice president of corporate communications Gerald Coggin could not be reached for specifics, including the total merger value. According to a release, the agreement calls for each NHR common share not currently owned by NHC to be converted into one share of NHC Series A Convertible Preferred Stock plus $9 cash. In addition, NHR shareholders will receive a special dividend for the period from Jan. 1, 2007 until the deal closes. Each share of the preferred stock will be entitled to annual preferred dividends of $.80 per share and will have a liquidation preference of $15.75 per share.

A special committee of NHR's board of directors recommended the merger, which has been approved by the board. The completion of the deal is subject to Hart-Scott-Rodino anti-trust review and approval by shareholders of both companies. There is no financing condition to the merger, according to the release.

"The proposed merger provides a larger asset and equity base that is anticipated to enhance our future growth and our prospects for long-term increases in shareholder value as we begin our 36th year of operation," Robert Adams, NHC president and CEO, says in a statement. "Elimination of the lease payments NHC has been making to NHR will, assuming continuation of current operating trends, result in a substantial increase in our annual recurring free cash flow, even after providing for the preferred dividends which we will pay on the new Series A Preferred Stock. Also, NHC will now own a portfolio of first class healthcare retirement and assisted living centers which it, in fact, constructed between 1991 and 1997 and which continue to be critical to our operations.