Hedge Fund Pushes Sabra Shareholders To Reject $7.4 Billion Merger

The proposed $7.4 billion merger of Sabra Health Care REIT, Inc. (Nasdaq: SBRA) and Care Capital Properties, Inc. (NYSE: CCP) has received another negative response, now from shareholder Hudson Bay Capital Management. The New York-based hedge fund advised Sabra stakeholders to vote against the transaction because it has led to a decline in Sabra share prices.

“We are being asked to approve a transaction that has caused a massive decline in Sabra’s stock price and trading multiples,” Hudson Bay CEO Sander Gerber wrote to Sabra shareholders in a letter Thursday.

Sabra, CCP and Hudson Bay had not responded to Senior Housing News’ requests for comment as of press time.

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Hudson Bay owns about 3.2% of Sabra’s shares, the letter said, making it the sixth largest holder in the company, according to an analysis from Bloomberg.

The merger must be approved by a majority of the shareholders to take place. Gerber emphasized that it is in shareholders’ best interest to reject the deal.

“We hope that it is as clear to you as it is to us that voting against the CCP acquisition maximizes the value that we, as collective holders of Sabra shares, deserve for our investment,” Gerber wrote, as reported by Bloomberg.

This comes after a proposed class action lawsuit against Chicago-based CCP in Delaware, claiming that the skilled nursing and health care real estate investment trust (REIT) violated the Securities Exchange Act of 1934. The goal of the lawsuit, and other similar lawsuits filed against CCP, is to prevent a stockholder vote on the merger until additional material is disclosed. This type of lawsuit, is “commonplace,” CCP Executive Vice President and CFO Lori Wittman told Senior Housing News.

The merger is expected to close in the third quarter of this year, and is anticipated to leave CCP shareholders in possession of about 59% of the company and Sabra shareholders in possession of about 41%.

The new REIT would be managed by Sabra and would keep the Sabra name. It would have a total of 564 investments, including senior housing communities, skilled nursing facilities, behavioral health hospitals and transitional care facilities.

Since the announcement of the deal, Sabra shares have dropped nearly 14% and CCP shares fell 4.7%. The Dow Jones Equity REIT Total Return Index gained 1.2% over that period, Bloomberg reported.

Sabra shares were up 0.44% at $23.08 as the market closed on Thursday.

Written by Elizabeth Jakaitis

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