California-based nonprofit senior living providers American Baptist Homes of the West (ABHOW) and be.group have agreed to merge, the companies announced today.
The consolidation will create California’s largest nonprofit senior living provider and one of the half-dozen largest nationally, the companies said.
The merger, expected to be finalized in early 2016 pending regulatory approval, will provide both companies the benefits that come with scale, be.group CEO John Cochrane told SHN. He emphasized this during a press call on Tuesday as well.
“Why merge, and why merge now?” Cochrane said. “Mission growth. Bigger by itself isn’t necessarily better, but bigger brings better resources. For residents, it means greater financial security and greater peace of mind.”
The merger will position the new company to have nearly $1.5 billion in total assets, with ABHOW bringing $1 billion in assets and be.group bringing $467 million in assets to the table. In addition, ABHOW has an annual revenue of $250 million, and be.group’s annual revenue is $110 million. Details of the deal structure were not immediately available.
“As we look at the changing senior housing landscape and the resources we’re going to need to fulfill our mission, scale is needed to compete,” Cochrane said, noting the Glendale, Calif.-based company has been exploring the benefits of affiliation for a while. “We’ve been looking for the appropriate partner, and ABHOW has always been at the top of our list.”
The unified company will provide continuing care, affordable housing, assisted living and memory support to more than 9,800 residents in 83 communities across California, Arizona, Nevada, Washington and Oklahoma. The plan is for the companies to have a single brand, but both will continue to operate under their respective names for the time being.
Currently, be.group serves nearly 4,000 residents across 34 communities that include low-income housing, skilled nursing, assisted living, independent living and other types of care.
Pleasanton, Calif.-based ABHOW reorganized its affordable housing division as Beacon Communities, effective Jan. 1 of this year. The company’s development projects are overseen by its Seattle-based subsidiary, Beacon Development Group—acquired earlier this year.
Beacon, which serves more than 2,500 residents in 33 communities, continues to develop new properties and reposition others with forward-thinking design through its relationships with community stakeholders, Beacon President Ancel Romero recently told SHN. The company previously announced a total of 10 development and redevelopment projects in its pipeline for 2015, and expects to take on three to five new projects yearly.
“The merger will be a good thing for Beacon,” said ABHOW CEO Dave Ferguson, noting the division will benefit from a greater pool of resources. Overall, ABHOW serves more than 5,800 residents in 49 retirement communities in California, Arizona, Nevada, Washington and Oklahoma.
The organizations appointed an affiliation committee to direct the planning for the merger, and the committee is drawn from their current boards.
Ferguson will be retiring after his 25th anniversary with the company next year. When the merger is finalized, Ferguson will become executive advisor to aid in the transition until his official retirement in early 2017. Cochrane will assume leadership of the combined organization at the close of the merger.
“We don’t view this as changing our strategy as much as amplifying and excelling our strategy,” Cochrane said about the merger. “We view this as a unique opportunity to join and amplify our missions, which are highly aligned. Scale means greater security and stability for our residents and it creates more opportunities for career development and enhancement for team members. By joining forces we can do more, do better, and reach more people.”
The merger between Brookdale Senior Living (NYSE: BKD) and Emeritus Senior Living Corp. (NYSE: ESC) changed the industry landscape, positioning the company to be by far the largest senior living provider. The ABHOW and be.group merger will provide the new entity a competitive edge, Ferguson said, noting nonprofits face competition from both other nonprofits and for-profits in the space.
“If we don’t position ourselves to grow and become stronger we’re going to become victims,” he says. “This is what it must have been like for Christopher Columbus sailing over the horizon. He believed in himself and his team, although he didn’t know what was out there. That’s what we’re doing going forward. We’re not able to define everything out there yet, but we know we’ll be successful.”
Written by Cassandra Dowell