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Done deal? Beverly Enterprise's sale nearly finalized.

Beverly Enterprise Inc., the nation's D largest nursing home chain, should have a new owner by the end of summer, according to company officials.

The Fort Smith, Ark.-based company--now known as BEI--put itself up for auction in March to prevent a hostile takeover. That process has since moved to the second and final round, according to Blair Jackson, Beverly's vice president of corporate communications.

"We're essentially on a short list (of companies) that are going through the final bidding process," Blair said. "The next announcement we'll make is that a winner has been selected."

Blair said the company has not made public the list of initial bidders or the ones that made the final cut. At least a dozen companies were initially interested, according to BEI.

One of the finalists is the very company that helped set up this scenario. According to Arnold Whitman, chief executive officer and co-chair of Formation Capital LLC, the Alpharetta, Ga.-based investment firm is in the second round and preparing to make its final bid. "We expect the process will take until August to finish," Whitman said.

In February, Formation made an unsolicited $1.5 billion offer to buy BEI. After the company's directors rejected the offer, Formation nominated its own candidates for board of directors, setting up a proxy battle. Both companies asked shareholders to vote for their respective boards; the matter was to be decided during BEI's annual meeting in April.

But in March, Beverly's board unanimously decided to put the company up for auction if Formation would end its proxy bid. In return, Formation would be included among the other bidders, according to BEI.

No matter who purchases the company, there will likely be some unhappy changes. "Under probably any scenario, there will be some positions eliminated," Chairman and CEO William Floyd said in a meeting with BEI employees, according to a press release. He noted that the company's existing severance policies would remain in effect for a year after the new ownership takes over.

He added that the sales process would be lengthy. Even once the finalist has been chosen and an agreement signed, it will still take a couple months before the transaction can actually close, Floyd said.

BEI has 420 skilled nursing facilities, assisted living centers and hospice/home care centers and employs 36,000 people in 25 states. The company had revenue of $1.98 billion in 2004.
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Title Annotation:MARKET WATCH
Author:Naditz, Alan
Publication:Contemporary Long Term Care
Geographic Code:1USA
Date:Jul 1, 2005
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