Hedge Fund Urges Shareholders to Halt Sabra-CCP Merger
In June, Sabra Health Care REIT, Inc. (Nasdaq: SBRA) announced a planned merger with Care Capital Properties, Inc. (NYSE: CCP). Now, Sabra stakeholder Hudson Bay Capital, a New York-based hedge fund, advised other stakeholders to vote against the deal because it has led to a decline in share prices for both parties.
“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.
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 go through. Gerber emphasized that it is in shareholders’ best interest to reject the deal, according to Bloomberg.
“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.
This comes after a proposed class action lawsuit against the 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. It was filed by shareholder Glenn Parish on behalf of himself and the public stockholders of CCP, with the goal of preventing a stockholder vote on the merger until additional material is disclosed. This lawsuit, among other similar lawsuits filed against CCP, was “commonplace,” CCP Executive Vice President and CFO Lori Wittman told Senior Housing News.
CCP, a SNF real estate investment trust (REIT), was spun off from Ventas (NYSE: VTR) back in 2015.
Sabra, CCP, and Hudson Bay did not respond to Skilled Nursing News’ requests for comment as of press time.
The merger is anticipated to close in the third quarter of this year, and is expected to leave CCP shareholders in possession of about 59% of the company. Sabra shareholders would own the remaining 41%.
Since the announcement of the deal, Sabra shares have dropped nearly 14% and Care Capital shares fell 4.7 percent. For comparison, the Dow Jones Equity REIT Total Return Index gained 1.2% over that period, Bloomberg reported.
Sabra stock closed trading Thursday at $23.08, representing an increase of $.10, or 0.44%.
Written by Elizabeth Jakaitis