Why MedEquities Realty Trust Is Skyrocketing

What happened

Shares of MedEquities Realty Trust (NYSE: MRT), a real estate investment trust focused on healthcare properties, jumped 45% as of 11:55 a.m. EST on Wednesday after the company announced that it has accepted a buyout offer from Omega Healthcare Investors (NYSE: OHI).

So what

Here are the key details of the agreement:

  • The transaction values MedEquities at $600 million, or $10.26 per share.
  • The deal will be paid for with cash and stock. MedEquities' shareholders will receive 0.235 shares of Omega common stock plus $2 in cash for each share they own.
  • The transaction is expected to close in the first half of 2019. There are no financing contingencies, and the deal doesn't require the approval of Omega's shareholders.

MedEquities CEO John McRoberts commented: "This is a very compelling transaction for MedEquities' stockholders. We believe going forward that our stockholders will be in an excellent position from having an investment in Omega's diversified portfolio."

Omega's CEO Taylor Pickett also expressed his enthusiasm for the deal:

"John and his team have built a high quality diversified portfolio, which should provide Omega with meaningful future growth opportunities. This acquisition reinforces our commitment to the skilled nursing and senior housing industry, while adding new asset types to our portfolio furthering our strategic objectives."

Now what

This looks like a done deal since the transaction is not subject to approval by Omega's stockholders and doesn't involve any financing contingency. Since the transaction is being financed with stock, MedEquities investors will have to decide for themselves whether they want to sell today and book the gain, or become Omega shareholders.

Either way, MedEquities shareholders are off to an excellent start to 2019.

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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.