Nursing Home Operator Fountain View to Buy Summit

Closely held skilled nursing home operator Fountain View Inc. of Los Angeles said Monday that it will buy Burbank-based Summit Care Corp. for $274 million in cash and assumed debt, as part of its plan to form a national network of assisted-care facilities.

Fountain View would pay $21 a share for Summit stock, 20% more than Summit’s closing price Thursday. Fountain View also said it will assume $130 million worth of Summit debt. Summit had said Friday that it was in talks with a potential buyer and expected a $21-a-share offer.

On Monday, shares of Summit rose $2.06 to close at $20.44 on Nasdaq.

Summit has 36 skilled nursing-care centers and five assisted-living centers, which provide services to elderly people who don’t need as much care as a nursing home provides. Fountain View, owned by Heritage Partners Inc., said in a statement the acquisition “makes a fine geographical fit in California.”

“Our business plan of creating a large, national skilled nursing home and assisted-living company is well underway with the acquisition of Summit Care,” said Michael Reichert, Heritage Partners’ managing general partner, in a statement.

Fountain View said it received a commitment from Heritage Fund II for $82 million of the financing, and a commitment from Bank of Montreal for $250 million.

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Summit said fiscal second-quarter revenue rose 17% to $54 million, from $46 million a year ago. Summit also said profit from operations fell to $1.20 million, or 18 cents a diluted share, from $1.37 million, or 20 cents, a year earlier.