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Multicare to be acquired
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June 16, 1997: 9:46 a.m. ET
Genesis teams with two firms for $1.4 billion buyout of N.J. health unit
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NEW YORK (CNNfn) - Genesis Health Ventures Inc. announced Monday it will team up with two investment firms to acquire The Multicare Companies, Inc. in a health care venture worth $1.4 billion.
Under the deal Genesis, which operates health care facilities for the elderly, will link up with The Cypress Group LLC and the Texas Pacific Group to form Genesis ElderCare Acquisition Corp.
GEAC will then acquire the New Jersey-based Multicare for $28 per share. Multicare shares (MUL) have been trading at about $25 per share recently. Multicare has about 37 million fully diluted shares outstanding and approximately $342 million in debt.
Genesis will also enter into a multi-year management services contract with the new GEAC venture to manage Multicare's operations. All Multicare services and products will bear the Genesis ElderCare brand.
The arrangement calls for Genesis to have 42 percent of GEAC stock, with Cypress and Texas Pacific controlling roughly for 58 percent of the new venture.
After four years, Genesis will have the option to acquire the GEAC equity of Cypress and TPG. After five years, Cypress and TPG have an option to put their GEAC equity to Genesis.
Genesis will contribute its institutional pharmacy and GEAC will contribute Multicare's institutional pharmacy to create a new Genesis-operated pharmacy company.
The acquisition agreement has been approved by the boards of both Genesis and Multicare and is expected to be finalized by the third quarter of this year.
The deal will be a strong addition to Pennsylvania-based Genesis' holdings. Multicare had first quarter annualized revenues of about $675 million and operates 155 facilities with 16,000 beds.
Genesis said Multicare's geographic position was part of the allure for the deal, giving the company more of a presence in Massachusetts, New Jersey, Pennsylvania and West Virginia.
--Randy Schultz
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