So funny is the huge number of press releases by various law firms "reminding" clients that YOU could be the lead plaintiff against ARCP if you act before Dec29. So funny how they all announce a lawsuit but now are all searching for someone to represent. Oh well, as the joke goes,"whats lower than whale poop?... lawyers".
Ventas stock kept low allows Ventas to acquire HCT for hundred of billions less than what HCT thought when it agreed to be acquired. It enables the HCT acquisition to occur near par cost with zero or near-zero premium being paid to HCT shareholders in spite of their predictions. At least a quarter of a $billion less.
Here's why: HCT shareholders originally paid $10 par for their shares but they agreed to convert each to .1688 shares of VTR. When VTR was 67.13, each HCT share would have been worth $11.33 (a +13% premium). Now however, should VTR hit $59.25, each HCT share will be worth $10 par alone with zero / zilch premium. More amazing still is that, if VTR goes below $59.25, HCT shareholders will be paying Ventas for the takeover of their HCT shares.
A savvy deal for Ventas. Getting HCT to lock on the .1688 convert with blind trust Ventas would hold $67.13 or higher, when of course, Ventas controls this to and thus can effectively sway the actual acquisition price. Its like someone saying to you "I will buy your house for $500K if my credit score stays above 700, but if it fades (and I control this), you agree to discount me as much." Very savvy indeed.
HCT shares become 0.1688 VTR shares. Back in May, VTR was 67.13, making each HCT share worth $11.33. However, today VTR is 61.82 making each HCT share worth only $10.43. (HCT's price today of $10.52 is in fact overvalued). The merger should have locked in an HCT share premium for the merger instead of a share multiplier. Ventas dropping since May undermines HCT shareholders. Not good. Not good at all.
From the merger documents.... "ARC Healthcare shares will generally be converted into a fixed number of Ventas shares, based upon a negotiated Ventas stock price of $67.13. In the transaction, ARC Healthcare shareholders will ... receive .... 0.1688 Ventas common shares ... Based upon the agreed upon Ventas stock price of $67.13, the per share value of the transaction represents a premium to ARC Healthcare shareholders of approximately 14 percent over ARC Healthcare’s closing stock price on May 30, 2014."