AlerisLife, in becoming a private company by being acquired by one of its managing directors, will be better able to focus on its business and mission, AlerisLife President and CEO Jeffrey Leer told employees Friday in a letter. The document was filed with the Securities and Exchange Commission.
The company, which is the parent organization of Five Star Senior Living, announced Friday that its board had agreed to an acquisition by ABP Acquisition 2 LLC, which ultimately is fully controlled by Adam D. Portnoy. Portnoy is a managing director of AlerisLife and chair of its board of directors.
The acquisition, which will cost approximately $43.8 million, will take the company from a publicly traded one to a privately owned one. The deal is expected to be completed in the first quarter.
“I have been working closely with Adam on our company’s turnaround and strategic plans since I became President and CEO of AlerisLife,” Leer wrote.
Leer, at the time the chief financial officer of AlerisLife, became interim president and CEO of the company in May 2022 after the resignation of former President and CEO Katie Potter. His appointment was made permanent in June as the company announced plans to cut costs and make operational changes to try to increase occupancy.
“Adam and I agree that being a privately owned rather than a publicly traded company will allow us to enhance our focus on operational excellence and put us in the best position to successfully deliver on our business and mission,” Leer said in the letter.
The CEO encouraged employees “to remain focused on delivering on our commitments to our residents, families and each other as we do every day,” saying that the tender offer “will have no impact on the day-to-day operations of our company.” In addition to its Five Star senior living management services division, AlerisLife also includes a rehabilitation / fitness services division that operates under the Ageility name.
Further information about the deal will be provided “as we are able,” Leer told employees.
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Portnoy was similarly circumspect on an RMR Group earnings call on Friday, telling analysts that it was a coincidence that the AlerisLife acquisition announcement was made on the same day as the call. Portnoy also is president and CEO of The RMR Group, which provides management services to AlerisLife and Diversified Healthcare Trust, the real estate investment trust that owns 120 of AlerisLife’s 140 Five Star Senior Living independent living, assisted living and memory care communities.
“Unfortunately, I’ve been advised by counsel that this is not the proper forum” to share more information about the acquisition, including its potential effects on The RMR Group or Diversified Healthcare Trust, he said. “There will be, in relation to that transaction, a Schedule TO, or tender offer document, that will be filed with the SEC in the coming days, which will have a lot of information in it.”
That document, Portnoy said, “will answer most, if not all” questions about the transaction.
“There will be no impact to RMR’s revenues as it relates to AlerisLife, and that’s pretty much all we can say,” RMR Group Executive Vice President, Chief Financial Officer and Treasurer Matthew Jordan said on the call.
ABP will acquire all of the outstanding shares of common stock of AlerisLife for $1.31 per share, which represents an 85% premium to the average trading price of the last 30 trading days of $0.71 per share, according to AlerisLife.
Portnoy, ABP and associated companies currently collectively own approximately 6.1% of the outstanding AlerisLife shares.
In a separate SEC filing on Friday, Diversified Healthcare Trust confirmed AlerisLife’s announcement that the REIT had entered into an agreement with Portnoy and ABP to tender all of the AlerisLife common stock shares owned by Diversified and its subsidiary (10,691,658 shares, or 31.9% of outstanding shares) into the tender offer. The move will occur on or before Dec. 31, according to the filing.
Read more details about the planned acquisition here.