Summary
- Omega Healthcare Inc. announced acquisition of MedEquities Realty Trust.
- While the premium seems huge, the price paid is still below the 52 week high.
- We examine the deal from both sides and give you our take.
Omega Healthcare Inc. (OHI) is no stranger to us. When we last spoke about it on November 5, we broke down that OHI was not really covering its dividend, especially if you counted things that really matter.
If we subtract the $45 million of year-to-date capex from actual operating cash flow of $348.4 million, we are left with $303 million. OHI paid $413 million in dividends.
The stock scoffed at our words and ran higher as if coverage never really matters. It has since pulled back and this comes today on the news that it is acquiring MedEquities Realty Trust (MRT).
OHI data by YChartsThe deal valued MRT at an almost 50% premium to its closing price and MRT shareholders were obviously thrilled.
