QCP Clears Up Investor Objections, Welltower Deal Vote Remains on Track

Quality Care Properties (NYSE: QCP) last week announced steps to clear up a pair of lawsuits surrounding its impending acquisition by fellow real estate investment trust (REIT) Welltower Inc. (NYSE: WELL).

The two class-action lawsuits — Sanderson v. Quality Care Properties and Kent v. Quality Care Properties — alleged that the REIT violated the Exchange Act by omitting certain pieces of information from its proxy statement on the Welltower deal.

That document, filed on June 21, laid out the specifics of Welltower’s planned acquisition of QCP through a joint venture with non-profit hospital system ProMedica.

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To resolve the complaints, which the plaintiffs claimed made the entire proxy disclosure “false and misleading,” the Bethesda, Md.-based QCP agreed to file extra disclosures to be read in conjunction with the existing proxy statement.

“Plaintiffs have agreed that, following the filing … they will dismiss the actions in their entirety,” QCP noted in an 8-K document with the Securities and Exchange Commission.

The additional information includes updated Goldman Sachs analyses of comparable home health, hospice, and post-acute care transactions — including Humana, Inc.’s (NYSE: HUM) acquisition of Kindred Healthcare, Inc. in conjunction with a pair of private equity firms, and the Carlyle Group’s purchase of skilled nursing provider HCR ManorCare in 2007.

The Toledo, Ohio-based ManorCare, QCP’s primary tenant, will also change hands as part of the Welltower deal, with ProMedica picking up the struggling nursing chain in a deal that’s already been approved by a federal bankruptcy court.

As is common in higher-profile mergers, the transaction has hit some potential speed bumps since it was first announced on April 26. In addition to the shareholder lawsuits, QCP revealed last month that it had received an offer that was potentially superior to Welltower’s nearly $2 billion proposal; that unnamed suitor then dropped out of the running just prior to the July 4 holiday, with QCP continuing to urge shareholders to approve the Welltower bid throughout the process.

QCP emphasized that the additional information requirement stemming from the lawsuits will not derail the previously scheduled shareholder vote on July 25.

Written by Alex Spanko

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