Welltower Updates Investors On Impending QCP, ManorCare Deal

May 21, 2018, Alex Spanko, Skilled Nursing News - Welltower, Inc. (NYSE: WELL) on Monday provided a brief update to shareholders on the company’s coming acquisition of Quality Care Properties (NYSE: QCP), the real estate investment trust (REIT) primarily associated with struggling skilled nursing provider HCR ManorCare.

The update, submitted as a filing with the Securities and Exchange Commission, affirms Welltower’s commitment to ProMedica, the non-profit hospital network that will acquire HCR ManorCare in a concurrent transaction.

Under the terms of the deal, first announced last month, Welltower and ProMedica will form an 80-20 joint venture to take over the Bethesda, Md.-based QCP’s real estate; in a separate transaction, the hospital provider will purchase HCR ManorCare’s operations, marking a major entrance into the skilled nursing industry for ProMedica and forming an alliance of hometown companies: Welltower, ProMedica, and ManorCare are all based in Toledo, Ohio.

The deal will only make sense if both parties go through with their respective transactions, Welltower said in the filing, asserting that the individual transactions are “cross-conditional.”

“Each has agreed not to negotiate or discuss with third parties any other transaction what would conflict or interfere with their joint acquisitions of QCP and ManorCare,” Welltower wrote, describing a signed agreement that expires on October 15.

The two parties also will not change the terms of the deal or back out without consulting the other first, according to Welltower.

The REIT is aiming for a completion date of August 25 for its own acquisition of QCP, with a penalty of $0.006 per share for every day that the deal extends beyond that deadline.  QCP shareholders must still approve that part of the transaction, although it already has unanimous support from both parties’ boards.

The vote will come after QCP files a proxy statement by the June 8 deadline and the company receives SEC approval.  The following day, June 9, QCP’s “go-shop period” ends and the REIT can no longer entertain potentially better offers from other suitors without incurring an even larger fine for backing out of the Welltower deal — $60 million as compared to the $20 million fine for pursuing an offer found during the go-shop period.

ProMedica’s acquisition of ManorCare, meanwhile, depends on approval from a bankruptcy court after the skilled nursing provider filed for Chapter 11 protection back in March.  The Delaware court overseeing ManorCare’s bankruptcy received no objections to the current plan, Welltower reported in the SEC filing, with a voting deadline of June 15 and court hearing scheduled for June 21.