IRVINE, Calif. — Sabra Health Care REIT Inc. (NASDAQ: SBRA) shareholders have voted to approve the company’s planned merger with Care Capital Properties (NYSE: CCP), despite objections of several major shareholders.
The proposed merger was announced in May. If completed, the transaction will create a healthcare REIT with a pro forma total market capitalization of roughly $7.4 billion and an equity market capitalization of roughly $4.3 billion. The all-stock transaction is scheduled to close Thursday, subject to customary closing conditions.
Several shareholders vehemently opposed the merger, most notably Hudson Bay Capital, which owns 3.9 percent of Sabra shares. The company cited a report by advisory firm Institutional Shareholder Services that suggested Sabra was overpaying for CCP, and that headwinds in the skilled nursing sector would cause the CCP portfolio (which is nearly all skilled nursing) to struggle.
The new REIT will be headquartered in Irvine and include a healthcare portfolio comprised of 564 investments across 43 states and Canada. Sabra’s current executive team will manage the company, which will continue to trade under the SBRA ticker symbol.
The vote occurred at Sabra's special meeting of stockholders. Holders of more than two-thirds of the shares voted in favor of the merger. The holders of approximately 87 percent of Sabra's outstanding shares of common stock voted at the meeting.
"We appreciate the support from Sabra shareholders for this strategically important transaction with CCP,” says Rick Matros, Sabra’s CEO. “We entered into this transaction because of its compelling long-term value creation opportunities. The Sabra team has a deep understanding and commitment to the space. In the near-term, we believe this transaction achieves our long stated goals while providing us with a stronger platform for continued growth.”
CCP separately announced that its shareholders also voted to approve the merger at a special meeting of CCP stockholders.
Prior to the merger, the portfolio of Irvine-based Sabra totaled 205 healthcare investments and an enterprise value of $3 billion. The portfolio of Chicago-based CCP totaled 359 investments and an enterprise value of $4.2 billion. CCP went public in August 2015 as a spin-off of giant healthcare REIT Ventas.
Under terms of the transaction, CCP shareholders will receive approximately 1.1 shares of Sabra common stock for each share of CCP common stock. Upon closing, Sabra shareholders are expected to own roughly 41 percent of the company while CPP shareholders will own 59 percent.
Going forward, no tenant will represent more than 11 percent of the new REIT’s annualized net operating income.
Sabra's stock price opened at $21.55 per share on Wednesday, Aug. 16 following the announcement, down from $24.32 one year ago.