Genesis HealthCare begs shareholders for buyout deal

Posted Apr 10th 2007 2:38PM by Tom Taulli
Filed under: Private Equity

The powerful shareholder advisory firm, Institutional Shareholder Services (ISS), indicated that shareholders should reject the $1.25 billion buyout of Genesis HealthCare Corp. (NASDAQ: GHCI). The buyers include private equity firms Formation Capital LLC and JER Partners.

Apparently ISS thinks that other bidders didn't have a chance to make a play for the company. In other words, Genesis shareholders may be leaving money on the table.

Genesis, of course, begs to differ. In fact, the company wrote a letter to shareholders saying that the deal is "compelling" and is valued at "all-time" highs for financial multiples for Genesis. Besides, the deal is getting close to completion and there could be a drop in the stock price if things don't go through.

Investors, however, don't seem to agree. The stock price for Genesis is currently at $63.26, above the buyout price of $63. In other words, meaning they think the price will get bumped up.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tags: Genesis Healthcare, GenesisHealthcare, ghci, ISS