Sabra Shareholders Approve Merger with SNF-Heavy CCP

Shareholders of Sabra Health Care REIT, Inc. (NASDAQ: SBRA) on Tuesday approved the company’s merger with Care Capital Properties (NYSE: CCP), ending a public battle involving dissident hedge funds and several lawsuits.

About two-thirds of the shares controlled by attendees at a special stockholder meeting in Irvine, Calif. were voted in favor of the deal, according to a release issued by Sabra late Tuesday. Around 87% of all outstanding shares, or 56 million, were involved in the vote.

“We appreciate the support from Sabra shareholders for this strategically important transaction with CCP,” said Sabra CEO Rick Matros in a statement.


“We entered into this transaction because of its compelling long-term value creation opportunities,” Matros said. “The Sabra team has a deep understanding and commitment to the space. In the near term, we believe this transaction achieves our long stated goals while providing us with a stronger platform for continued growth.”

CCP’s shareholders also green-lit the deal in a separate summit, with participating shareholders approving the transaction with 98% of the vote, the company said.

“On behalf of the board of directors and management of CCP, we would like to thank our shareholders for the support they have given us over the past two years and wish the Sabra team the very best for a successful transition and implementation,” CCP CEO Raymond Lewis said in a statement.


Skilled nursing facilities will account for 73% of the combined real estate investment trust’s (REIT) total portfolio, a fact that contributed to the firms’ somewhat rocky road to marriage.

Warning shots

The $7.4 billion deal had faced numerous hurdles, including the announcements that two minority shareholders — New York City-based hedge funds Eminence Capital and Hudson Bay Capital — would be voting against the deal, citing the uncertainty surrounding the skilled nursing industry, declines in the stock price of both parties, and questions over whether Sabra overpaid for CCP.

Matros routinely fought back against the allegations throughout the process, calling Eminence and Hudson Bay “a couple of dissident shareholders that do not have the requisite experience to address the fundamentals of this space” on its quarterly earnings call. Matros also repeatedly insisted that the deal would allow the combined REIT to further diversify its portfolio into the future by lowering Sabra’s cost of capital.

In addition, the Chicago-based CCP found itself slapped with multiple lawsuits over whether the REIT had violated the Securities Exchange Act of 1934 — including a Delaware suit that claimed CCP had withheld certain information, and another accusing CCP of lying on its registration statement. The REIT, in turn, characterized these suits as the routine side effects of large mergers and declined to comment on their merits.

Sabra and CCP received boosts from proxy advisory firms in recent weeks. Both Glass, Lewis & Co. and Egan-Jones Ratings Company released reports that encouraged shareholders to vote for the impending deal, citing Sabra management’s experience and casting doubts on Hudson Bay and Eminence’s motives.

A third firm, Independent Shareholder Services, had previously called on shareholders to reject the deal over SNF-industry concerns.

A combined future

As previously announced, the combined firm will retain the Sabra name and headquarters in Irvine, Calif., with Matros and several current Sabra executives remaining at the helm. Lewis will join Sabra’s board — which Matros also chairs — along with two additional CCP veterans.

The transaction will officially close on August 17, according to Sabra’s release.

Written by Alex Spanko

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