Sonida Senior Living to buy CNL Healthcare Properties for $1.8B in cash, stock

Sonida Senior Living and CNL Healthcare Properties announced a definitive merger agreement under which Sonida will acquire 100% of CHP in a cash and stock transaction valued at approximately $1.8B. As a combined enterprise, Sonida expects to have an equity market capitalization of approximately $1.4B and a total enterprise value of approximately $3B upon closing. The combined company, which will continue to trade on the NYSE under the ticker (SNDA) has a combined portfolio of 153 owned independent living, assisted living and memory care senior living communities. Under the terms of the merger agreement, Sonida will acquire 100% of the outstanding common stock of CHP in a stock and cash transaction valued at approximately $1.8B, which equates to $6.90 per share of CHP, with approximately 66% of the consideration expected to be in the form of newly issued Sonida common stock and 34% in cash. Specifically, each share of CHP common stock will be converted into $2.32 in cash and a number of shares of Sonida common stock, determined by dividing $4.58 by the volume weighted average price of Sonida common stock during a measurement period prior to closing of the transaction and subject to an asymmetric collar. To help ensure certainty of value for the stock portion of the merger consideration, the exchange ratio is subject to adjustment based on the VWAP during the measurement period prior to closing of the transaction, with a collar of 15% below the reference price and 30% above the reference price. Based on maximum and minimum exchange ratios of 0.2015x to 0.1318x, respectively, Sonida existing shareholders’ ownership would range from 39.5% to 50.0% of the newly combined company’s diluted common equity, with estimated Normalized FFO per share accretion of 28% to 62%, and 40% accretion at the reference price.