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Genesis Shareholders OK $1.9B JV Bid

KENNETT SQUARE, PA-The original bidder gains the healthcare REIT after a rancorous process that pushed the offer from $63 to $69.35 a share.

By Marita Thomas | Updated on May 30, 2007

KENNETT SQUARE, PA-Shareholders of Genesis HealthCare Corp. have voted to approve an amended merger agreement between the locally based healthcare REIT and a partnership of affiliates of Formation Capital LLC and JER Partners. This brings an often-rancorous bidding war to a close.By the end of the war, which went through seven successive rounds of counter bids from San Francisco-based Fillmore Capital Partners LLC, the stakes rose from an initial offer of $63 per share to $69.35 per share in cash and lifted the aggregate price of the buyout to approximately $1.9 billion. Approval came today at a shareholders’ meeting, which was delayed three times.

The process was initiated in mid-January, when Genesis signed an agreement to be acquired by joint venture between Alpharetta, GA-based Formation and McLean, VA-based JER for $63 per share. Following a March 29 complaint filed by Drumm Investors LLC in the Chester County Court of Common Pleas alleging a rigged bidding process, Genesis vigorously urged shareholders to vote in favor of the deal.

“No higher offers have been received… any suggestion to the contrary is untrue,” the Genesis board said in a letter to shareholders in which it defended the bidding process and also called the Drumm lawsuit “without merit.” Northbrook GH LLC, which owns approximately 5% of Genesis stock, then wrote an irate letter to Genesis principals and submitted it to the SEC.

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