Carlyle buying Manor Care for $6.3B

NEW YORK (CNNMoney.com) -- Nursing home operator Manor Care Inc. said Monday it has agreed to be taken private by private equity firm Carlyle Group for $6.3 billion, including assumed debt.

Manor Care (Charts) said shareholders will receive $67 in cash for each share of common stock, representing a 20 percent premium to Manor Care's closing stock price of $55.75 on April 10. Shares were down 1.6 percent on the New York Stock Exchange mid-day Monday.

Completion of the transaction is pending shareholder approval. Manor expects the deal to close in the fourth quarter of 2007. The deal will be financed through a combination of commercial mortgage-backed securities, other debt financing and cash provided by Carlyle.

Private equity firms typically buy companies and implement restructuring programs, aiming to sell them at a much higher price. Nursing home operators produce steady cash, making them an attractive buy for private equity firms that need the cash to pay down borrowed debt.

Stable reimbursement from Medicare, the federal health insurance program for the elderly, and the value of underlying real estate made the company an attractive takeover target, analysts said.

Manor Care's financial adviser is JPMorgan (Charts, Fortune 500), and its legal advisor is Cravath, Swaine and Moore LLP. The Carlyle Group's financial advisers are Morgan Stanley (Charts, Fortune 500), Credit Suisse (Charts) and Banc of America Securities LLC, and Latham & Watkins LLP is legal advisor.

Manor Care, the largest U.S. owner of nursing homes, provides short-term post-acute services and long-term care, and employs nearly 60,000 workers who provide care for patients and residents through nursing and rehabilitation centers, assisted living facilities, outpatient rehabilitation clinics, and hospice and home care agencies.

Major competitors include Kindred Healthcare Inc. (Charts, Fortune 500) and Sun Healthcare Group Inc. (Charts)

Private equity activity in the health-care sector has accelerated since last year's leveraged buyout of hospital chain HCA Inc. Nursing home chain Genesis HealthCare Corp. agreed to be purchased by private equity buyers in January, and Beverly Enterprises went private in 2005.

Reuters contributed to this report.