ABP Acquisition LLC announced Monday that it intends to make a cash tender offer for up to 10 million shares of common stock of Newton, MA-based Five Star Quality Care at a $3 per share, a 57% premium over Friday’s closing price of $1.91 per share.
The amount represents approximately 20% of the outstanding shares of Five Star’s common stock, ABP said. The tender offer will be open to all Five Star stockholders.
The company finished Oct. 3 trading at $2.66 per share.
ABP, also of Newton, MA, is affiliated with Barry Portnoy, a managing director of Five Star, and with the controlling shareholders of The RMR Group Inc. and its subsidiary, The RMR Group LLC, which is Five Star’s business manager.
ABP and the shares it acquires in the tender offer will be subject to standstill and lockup restrictions for extended periods, Five Star said.
ABP’s announcement came two days after Five Star’s Board of Directors, acting by a special committee, conditionally exempted ABP from certain Five Star bylaw and charter restrictions applicable to certain ownership limitations of not more than 5% and 9.8% of Five Star’s shares of common stock, respectively.
“The board, acting by this special committee, intends to express no opinion to the company’s shareholders with respect to the tender offer, as it believes the decision as to whether to tender Five Star shares is a personal decision which should be made by shareholders based upon their personal circumstances,” Five Star said in a press release. “Five Star’s board suggests that each shareholder should review the tender offer and all related information, when available, consult with such holder’s financial and tax advisors and make an independent determination.”
As of June 30, Five Star operated 276 senior living communities with a total of 31,191 units located in 32 states, including 214 communities (22,952 living units) that it owned or leased and 62 communities (8,239 living units) that it managed. These communities include independent living, assisted living, continuing care retirement communities and skilled nursing communities.