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Ventas to pay $2.6 billion for ARC Healthcare

Ventas (VTR), the largest U.S. healthcare real estate investment trust, agreed to buy American Realty Capital Healthcare (HCT) for $2.6 billion in a stock and cash deal, the company announced Monday.

ARC Healthcare, which primarily owns medical office buildings and senior housing facilities, will expand Ventas’ footprint in medical-focused properties and provide the $20 billion company access to ARC Healthcare’s pipeline of potential investments, which exceed $250 million and are expected to be completed by the end of 2014.

“Ventas is an ideal strategic partner given its complementary and broadly diversified real estate portfolio,” Nicholas Schorsch, executive chairman of ARC Healthcare, said in a statement. It will provide shareholders with “the opportunity to participate in the future growth of what will become the largest, and in my view, best managed healthcare REIT.”

The $11.33 per share price is about 14% higher than ARC Healthcare’s closing price on May 30.

ARC Healthcare’s shares will be automatically converted in a fixed number of Ventas shares, and investors have the option to convert their holdings for 0.1688 Ventas shares or $11.33 cash. Ventas anticipates that ARC Healthcare shareholders will hold 8% of the total shares after the deal is completed.

In a separate transaction, Ventas purchased 29 Canada-based independent living senior housing communities from Holiday Retirement for $900 million cash.

The transactions are expected to be immediately accretive to Ventas’ 2015 earnings by at least $0.10 per share.

“These acquisitions are consistent with our stated strategy to be the leading owner of healthcare and senior living properties globally,” Ventas chairman and CEO Debra Cafaro, said in the release. “And position Ventas to continue to deliver growth and consistent superior returns to our shareholders.”