Extendicare REIT Announces Sale of its U.S. Group Purchasing Division for US$56 Million

Extendicare Real Estate Investment Trust announced its wholly owned U.S. subsidiary, Extendicare Health Services, Inc. (EHSI), has reached an agreement in principal to sell its group purchasing organization, or GPO, to Navigator Group Purchasing (Navigator), a subsidiary of Managed Health Care Associates, Inc. (MHA).

The transaction, valued at approximately US$56 million, is expected to be finalized and closed in early 2012 and result in an after-tax gain of approximately US$32 million that will be recognized by the REIT in the first quarter of 2012.

"UHF Purchasing Services and Star Purchasing Services, LLC have been valued members of the Extendicare family of companies for many years and have grown to be leading GPOs in their markets. The sale by the REIT of this non-strategic business is both timely and opportunistic, and will further strengthen our organization," said Tim Lukenda, Extendicare REIT's President and CEO. "This sale to Navigator results in the formation of the country's largest long-term care GPO and is expected to ensure the continuation of highly competitive pricing of goods supplied to EHSI's core health center operations. We look forward to a strong working relationship with MHA well into the future," Lukenda added.
 

on December 19, 2011