SUN HEALTHCARE GROUP: TO ACQUIRE REGENCY HEALTH SERVICES
Albuquerque, NM-based Sun Healthcare Group Inc. and Tustin,This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
CA-based Regency Health Services Inc. have announced an agreement
under which Sun will acquire all of the outstanding shares of
Regency for $22 per share, or approximately $369 million in cash.
In addition, approximately $220 million of Regency debt will be
assumed or refinanced by Sun. Sun is an international provider
of diversified long-term care services. Regency is an operator
of skilled nursing facilities and a provider of rehabilitation
therapy, institutional pharmacy and home health services.
Sun expects to complete the deal during the fourth quarter of
1997 (Sun Healthcare release, 7/27).
BIGGER IS BETTER
Andrew Turner, Sun chairman and CEO, said that "bigger is
better, especially in negotiations between nursing home operators
and the managed-care industry." Turner added, "If one has a
larger number of facilities, it's more likely that you will be
able to negotiate than if you have little to offer." Richard
Matros, Regency's CEO, said "recent consolidations have created
companies with billions of dollars in sales, putting smaller
companies like Regency at a disadvantage." He added, "Why would
people on Wall Street bring (acquisition) deals to us when they
have $3-billion guys to go to? That meant we had to size up"
(Marsh, Los Angeles Times, 7/29). Upon completion of the Regency
acquisition, Sun will operate 510 long-term care facilities in
the United States and the United Kingdom with a total of 49,141
beds, and 47 assisted living facilities, with 4,583 units. Sun
expects annualized revenues in excess of $3 billion in 1998 (Sun
Healthcare release, 7/27).
According to the Times, "Sun Healthcare expects Regency's
businesses would strengthen its presence in California. Regency
owns 116 nursing homes, including 42" in California. Sun
Healthcare currently "operates 17 nursing homes in California"