Quality Care Properties has announced a July 25 date for a special meeting where stockholders are expected to vote on a proposed merger with Welltower and multimillion dollar “golden parachute” payments for some executives.
Information about the Bethesda, MD, special meeting was included in a proxy statement filed Thursday with the Securities and Exchange Commission. Stockholders also may vote online or by mail or phone.
The QCP board, despite announcing June 12 that it had received a new acquisition proposal from a different suitor that “could reasonably be expected to lead to a ‘superior offer,’ ” said it continues to recommend that stockholders approve the merger agreement with Welltower that was announced in April.
“The board of directors of the company has unanimously approved the merger and determined that the merger agreement is advisable and in the best interests of the company and its stockholders,” the proxy statement said.
QCP said Thursday that it believes that the potential rival to Welltower, which it did not name, is continuing to conduct due diligence on QCP in anticipation of possibly offering its own merger bid.
Stockholders — as of June 18, there were 94,196,282 shares of common stock outstanding, of which 93,789,186 were entitled to vote, QCP said — also will have the chance to vote on two additional proposals at the special meeting, and both also are unanimously supported by the board.
One proposal is a nonbinding, advisory vote on potential “golden parachute” compensation of approximately $27.4 million for QCP Chairman and CEO Mark Ordan, $15.9 million for President and Chief Investment Officer D. Gregory Neeb and $9.2 million for Chief Financial Officer C. Marc Richards in connection with the merger. The proposed payments include severance, a prorated bonus and stock options.
The QCP board also is asking stockholders for permission to adjourn the special meeting so that the board can solicit additional proxies if there aren’t enough votes to approve the merger at the special meeting. If the meeting is adjourned under such circumstances, stockholders who already had submitted their proxies would be able to revoke them at any time before they are used. The acquisition must be approved by a majority of shareholders to proceed.
QCP said it expect that the company’s directors and executive officers will vote in favor of all of the proposals at the special meeting, “although none of them is obligated to do so.” As of June 18, the directors and executive officers owned approximately 0.19% of the outstanding common stock of the company entitled to vote at the special meeting, QCP said.
Under the terms of the proposed merger deal with Welltower, the real estate investment trust would acquire the assets of QCP for $20.75 per share — or approximately $1.95 billion. Technically, the merger would occur between QCP and Potomac Acquisition LLC, a Welltower subsidiary.
Simultaneously, nonprofit health system ProMedica would acquire QCP tenant HCR ManorCare, including assisted living and memory care communities as well as skilled nursing facilities, for approximately $1.35 billion. ManorCare would become a wholly owned indirect subsidiary of QCP.
A new 80/20 joint venture between Welltower and ProMedica would lease ManorCare’s real estate to ProMedica for 15 years. ProMerica also would acquire ManorCare’s operations.
The companies cleared another hurdle Thursday when a federal judge approved ManorCare’s post-bankruptcy plan involving ProMedica and Welltower.
In an SEC filing of a question-and-answer document for shareholders late Thursday, however, Welltower said that the ProMedica part of the deal won’t happen if the Welltower part falls through.
“Welltower and ProMedica Health Systems, Inc. believe that, because they are seeking to jointly acquire an operating company and the entity that owns and leases real property to that operating company, their individual acquisitions of QCP and ManorCare will make commercial sense only if the other acquisition is also consummated,” the REIT said. “They have, accordingly, agreed with QCP and ManorCare that the two acquisitions will be cross-conditional and neither will close unless the other acquisition closes at the same time.”
If QCP votes to merge with Welltower, all associated acquisitions should close in the third quarter, Welltower said.
Welltower, ProMedica and ManorCare all are based in Toledo, OH. QCP is based in Bethesda, MD.