This January, Genesis struck a merger agreement with Formation/JER under which the JV would pay $63 per share for Genesis stock. The agreement would take Genesis private, and it would continue to operate under the Genesis name.
The announcement initiated a firestorm with at least one major shareholder, Northbrook GH LLC, accusing Genesis of "stacking the deck against any other bidder" and undervaluing the company. On April 19, Formation/JER raised its offer to $64.25 per share.
At the time, principals of the two companies said in a joint statement, "It is important to highlight that $64.25 is our 'best and final' price." The statement by Cia Buckley, president of McLean, VA-based JER's US fund business, and Arnold Whitman, CEO of Alpharetta, GA-based Formation, said, "If Genesis shareholders do not vote in favor of this transaction at this price, then JER and Formation will focus our attention on other attractive acquisition opportunities."
With receipt of the Fillmore offer, Genesis' board of directors issued a statement saying, "At this time, the board's recommendation in favor of the Formation/JER transaction is unchanged." It also said, however, that "consistent with its fiduciary duties and the obligations under its existing merger agreement" with the JV, it "will review the Fillmore proposal and consider it relative to the pending transaction with Formation/JER."
The Formation/JER agreement calls for a $50-million break-up fee if the transaction doesn't take place. Genesis shareholders on record as of March 5 are entitled to vote on the merger at the May 4 meeting. Shares of GHCI common stock spiked to a 52-week high of $64.56 on the Nasdaq following the newest offer, and settled to $63.75 per share by midday Friday, April 27. The 52-week low of $43.72 per share occurred in August 2006.
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