A shareholder that has been putting public pressure on Five Star Senior Living (Nasdaq: FVE) to sell off assets now is seeking a larger stake in the company. Based in Newton, Massachusetts, Five Star is one of the largest senior living providers in the nation.
Nearly 7% of outstanding Five Star shares are held by William F. Thomas and Robert D. Thomas, co-founders of Senior Star Management, a Tulsa, Oklahoma-based senior housing owner and operator. Nearly one year ago, the Thomas brothers sent a proposal to Five Star arguing that the company would unlock significant value by selling off a portion of its owned properties. The Thomases sent a letter of intent stating that an affiliate of Senior Star would buy Five Star’s 33 owned properties for $325 million.
Five Star repeatedly rejected Senior Star’s offer, including during a November 2015 meeting at which Five Star Managing Director Barry Portnoy “made it clear that Five Star’s owned assets are not for sale,” according to an SEC filing.
Earlier this month, a company owned by Barry Portnoy made a tender offer for up to 10,000,000 shares of Five Star common stock at $3.00 per share. Five Star’s directors waived certain ownership restrictions to allow the tender offer.
Now, Senior Star has said it will make a competing offer in the coming days for up to 10,000,000 shares priced at $3.45 per share. The Thomas brothers and certain donor-advised charitable funds currently hold about 3.36 million Five Star shares.
“Senior Star’s interests are truly aligned with the interests of all shareholders in providing fair value for any shareholders who may be seeking liquidity for their investment, on the one hand, while continuing to seek to take steps to improve the company’s corporate governance and strategic direction to drive shareholder value creation for long-term holders, on the other hand,” Senior Star wrote in a statement issued Thursday.
Senior Star said it expects “good faith” from Five Star’s directors in granting ownership waivers and other exceptions, as they did for Portnoy’s tender offer. Senior Star also urged shareholders to take no action on the “inferior” $3.00 per share tender offer.
Five Star shares surged 48% following the Portnoy tender offer on Oct. 3. Shares were up 10.63% as of early Thursday afternoon.
Five Star declined to comment for this article.
Written by Tim Mullaney