$1.1 billion buyout offer pushes Hillhaven Corp.

March 08, 1995|By McClatchy News Service

TACOMA, Wash. -- Pressure on Hillhaven Corp. to sell increased yesterday as a New Mexico nursing-home chain raised its purchase offer.

Horizon Healthcare Corp. of Albuquerque increased its offer to acquire Hillhaven to $31 per share of common stock, or $1.1 billion.

Horizon's previous offer, which the Tacoma, Wash.-based company rejected, was $28 a share, or about $1 billion.

The latest offer is part of a struggle that began Jan. 26, when Horizon made a surprise offer for the much larger rival chain of nursing homes. Horizon was supported by Hillhaven's largest shareholder, Tenet Healthcare Corp.

Hillhaven said yesterday that it has Horizon's offer, will evaluate it, and will respond when practical.

Hillhaven's Tim Carroll, vice president of investor relations, said the new offer came because Horizon realized that Hillhaven has "incredible value," and is "clearly worth more."

The new offer validates Hillhaven's decision to turn down $28 a share, he said.

But the pressure on Hillhaven to sell increases.

Analysts believe that Hillhaven's directors don't want to sell. But shareholder pressure, especially from institutional investors, could make it tough to turn down the new offer.

"Three dollars more gets around the issue of not offering enough," said Rachael Scherer of Dain Bosworth in Minneapolis. "But there are lots of reasons for Hillhaven's management to remain independent."

Horizon and Hillhaven haven't shared good past relations. Horizon's leadership came from Hillhaven, and the two companies haven't said nice things to each other, she said.

Many people at Hillhaven fear for their jobs if there's a pooling of the two companies, she said.

In announcing the new offer, Horizon released a March 7 letter it sent to Hillhaven's chief executive officer, Bruce Busby.

The new purchase offer is contingent upon Hillhaven completing its $120 million purchase of an Indianapolis nursing-home company in June, Horizon Chairman Neal Elliott said in the letter.

The offer to Hillhaven expires March 21, Mr. Elliott said.

Horizon plans to purchase 8.8 million shares of Hillhaven stock from Tenet. The Santa Monica, Calif.-based company owns 27 percent of Hillhaven stock; Horizon also owns shares of Tenet.

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