NEW YORK (AP) -- Genesis HealthCare said Wednesday it agreed to buy Sun Healthcare Group Inc. in a $217 million deal that combines two large providers of skilled nursing and rehabilitation services.
Genesis will pay $8.50 per share for Sun and valued the deal at $275 million, including debt. The price is a premium of 43.1 percent to Sun's Tuesday closing price of $5.94. The board of Irvine, Calif.-based Sun has approved the deal, and Genesis said the sale should close in the fall after a review by antitrust regulators and other closing conditions.
Health Care REIT Inc., which is Genesis' largest tenant, said the combined company will be the biggest post-acute and skilled nursing service provider in the U.S. It leases 18 facilities to Sun. Sabra Health Care REIT Inc., Sun Healthcare's largest tenant, said it views the deal as a positive, too.
Shares of Sun Healthcare surged $2.17, or 35.3 percent, to $8.31 in after-hours trading, after gaining 3.4 percent during regular trading to close at $6.14. The stock has traded between $2.06 and $9.07 in the last year.
Genesis, based in Kennett Square, Pa., said the combined company will have annual revenue of around $4 billion and 420 health care facilities. Sun operates 158 skilled nursing facilities, along with nursing homes and housing facilities for seniors and mental health centers. It also provides rehabilitation therapy services, medical staffing services, and hospice services. Genesis has 200 facilities in 13 Eastern U.S. states and said its rehabilitation services business works with more than 1,100 health care providers.