Manor Care gets 2 buyout offers; Chain's fallen shares rise up and scamper 28.5% to $12.6875; Nursing home chains


Manor Care Inc., whose shares have slid along with other nursing home stocks in the past few months, was the target of competing takeover bids yesterday, causing the shares to jump 28.5 percent.

Manor Care closed the day at $12.6875, up $2.8125. Trading volume was 3.2 million shares, about six times the daily average the past six months.

Stewart Bainum Jr., the Maryland businessman who is chairman of Ohio-based Manor Care, said yesterday that he would buy the company at a price "significantly in excess" of the current stock valuation.

His offer came shortly after the company announced that it had received an acquisition proposal from a group "which included members of the company's senior management."

Setting the stage for the buyout offers, analysts said, were troubles the industry has had in the past year, as Medicare reimbursements were cut, pushing four of the seven largest nursing home chains -- including Integrated Health Services Inc. of Sparks -- into bankruptcy protection.

Manor Care, with a high rate of private-pay patients and, therefore, relatively limited Medicare exposure, "is a much better-positioned company than the four that have gone bankrupt and the others that are teetering," said Robert M. Mains, an analyst at Advest Inc. in Saratoga Springs, N.Y.

Although different from the other nursing home chains, Mains continued, Manor Care had been "tarred with the same brush" by investors, who had pushed its stock price below its true worth.

Leslie Henshaw, an analyst with ING Barings in New York, said she estimated the value of the company at $17 to $20 a share.

Manor Care was trading at $21 in November, but the shares slid as low as $8.50 last month -- a decline of nearly 60 percent over a period when three other nursing home chains filed for Chapter 11 bankruptcy protection.

"If the public markets aren't going to give you what the company is worth," Mains said, "you can take it private."

In its current form, Manor Care -- with 300 facilities in 31 states, including 21 sites in Maryland -- was created by the 1998 merger of Ohio-based Health Care and Retirement Corp. (HCR) with Gaithersburg's Manor Care Inc. In addition to running nursing homes, it operates assisted living facilities and rehabilitation centers.

Bainum, who had headed Manor Care, became chairman of the merged company, but the chief executive officer and other top executives came from HCR. Manor Care closed its Gaithersburg headquarters, and the new company was based at the old HCR headquarters in Toledo.

Neither Bainum nor the management group gave details of what it was prepared to offer.

The company's board of directors said it was forming a committee for "exploring various strategic alternatives," although it warned that "there can be no assurance that any transaction will result from this process."

Stewart Bainum, father of the current Manor Care chairman, entered the nursing home business in 1959 and formed Manor Care in 1968. In 1980, he merged his Quality Inn hotel chain into Manor Care. The hotels were spun off in 1996 as Choice Hotels International Inc. Stewart Bainum Jr. is also chairman of Choice Hotels, which has its headquarters in Silver Spring.

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