Global private investment firm TPG has entered a definitive agreement to acquire Menomonee Falls-based Assisted Living Concepts Inc.
Assisted Living Concepts operates 210 senior living residences serving more than 9,000 residents in 20 states. The company has 4,595 employees, 377 of which are in Wisconsin.
The company has recently been plagued with financial and legal problems.
In early May, the audit committee of ALC’s board of directors launched an investigation after receiving an internal whistleblower complaint concerning “possible irregularities” in connection with a lease of eight facilities from Ventas Realty Limited Partnership.
On June 21, ALC announced a settlement of the Ventas litigation. As a result of the settlement, for the first six months of 2012 ALC reported a net loss of $19.5 million – nearly equal to ALC’s entire net income for 2011.
Then, on August 7, the company announced that it was the subject of an investigation by the Securities and Exchange Commission concerning, among other things, “compliance with occupancy covenants” under the Ventas lease and the “leasing of units for employee use.”
ALC reported a net loss of $4 million in the third quarter of 2012, down from $5.8 million in 2011. Its fourth quarter earnings report comes out March 4.
Dr. Charles Roadman II, a former Surgeon General of the United States Air Force and board member for Extendicare Inc. and ALC, has served as interim president and CEO since May.
He quickly hired 800 people to meet staffing needs and improve upon customer service, Roadman said in a November interview with BizTimes.
“The goal was obviously to stabilize the company and get it going,” he said. “With my military background, it is to get the company in level flight and I think we have done that.”
The acquisition would provide ALC stockholders $12 in cash for each share of Class A common stock and $12.90 cash per share of Class B common stock. ALC’s board of directors has approved the agreement.
“We are very pleased with the transaction,” said Mel Rhinelander, chairman of a special committee of the board of directors that examined strategic alternatives. “The acquisition represents a significant premium for our shareholders, and we also believe that TPG will help continue ALC’s focus on high quality service and care for our residents.”
ALC stockholders, including a majority of its Class A stockholders, must also approve the transaction. The regulatory approvals and closing conditions must also be met. The transaction is not subject to a financing condition.
The special committee worked with financial advisor Citigroup Global Markets Inc. and independent legal counsel Cravath, Swaine & Moore LLP.
ALC’s stock was up $2.18 in early trading.
