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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES ACT 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
SEPTEMBER 5, 1996 (SEPTEMBER 4, 1996)
GRANCARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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CALIFORNIA 1-19571 95-4299210
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
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ONE RAVINIA DRIVE, SUITE 1500
ATLANTA, GEORGIA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
30346
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (770)-393-0199
_______________________________________________________________________________
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ITEM 5. OTHER EVENTS
On September 4, 1996, GranCare, Inc. ("GranCare") announced that it had
entered into a definitive merger agreement pursuant to which GranCare's
institutional pharmacy business will merge with and into Vitalink Pharmacy
Services, Inc. ("Vitalink") an 82% owned subsidiary of Manor Care, Inc.
In connection with the transaction, GranCare will spin-off its skilled
nursing, contract management, home health, assisted living and related
businesses (the "Skilled Nursing Business") in a tax-free distribution of stock
to its shareholders. Thereafter, pursuant to the merger agreement, GranCare
(which will then consist only of institutional pharmacy assets) will merge with
and into Vitalink (the "Merger"). In the Merger, Vitalink will issue 11.6
million shares of Vitalink common stock (the "Vitalink Shares") to GranCare
shareholders in exchange for all of the outstanding shares and stock options of
GranCare (constituting an exchange ratio of 0.478 of a share of Vitalink common
stock per share of GranCare common stock), and will assume $107 million of
indebtedness. A portion of the Vitalink Shares will be reserved to permit the
exercise of all existing options and warrants to purchase GranCare common stock
which will be converted as part of the Merger into options and warrants to
purchase Vitalink common stock.
The Skilled Nursing Business of GranCare will continue to be conducted as
a publicly-held company and will retain the GranCare name.
The Merger is expected to be consummated on or about December 31, 1996, and
is subject to certain conditions, including shareholder approval, regulatory
approval, receipt of required consents and certain other customary closing
conditions.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GRANCARE, INC.
By: /s/ Evrett W. Benton
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Evrett W. Benton
Executive Vice President, General
Counsel & Secretary
DATED: September 5, 1996
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EXHIBIT INDEX
Sequential
Exhibit No. Page No.
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99.1 GranCare, Inc. Press Release dated September 4, 1996,
announcing signing of definitive merger agreement with
Vitalink Pharmacy Services, Inc.
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FOR: VITALINK PHARMACY FOR: GRANCARE, INC.
SERVICES, INC.
CONTACT: SCOTT MACOMBER CONTACT: KAY L. BROWN
VICE PRESIDENT, FINANCE & SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER CORPORATE
708/505-1320 COMMUNICATIONS
770/673-2507
FOR: MANOR CARE, INC.
FOR IMMEDIATE RELEASE CONTACT: LEIGH COMAS
- --------------------- VICE PRESIDENT, FINANCE &
ASSISTANT TREASURER
301/979-4168
VITALINK PHARMACY SERVICES AND GRANCARE
ANNOUNCE INSTITUTIONAL PHARMACY MERGER AGREEMENT
-WILL CREATE MAJOR INSTITUTIONAL PHARMACY COMPANY -
Naperville, Illinois, September 3, 1996 -- Vitalink Pharmacy Services, Inc.
(Nasdaq: VTLK) an 82% owned subsidiary of Manor Care, Inc. (NYSE: MNR) and
GranCare, Inc. (NYSE:GC) announced that they have entered into a definitive
merger agreement pursuant to which GranCare's institutional pharmacy business
will merge with and into Vitalink in a merger of equals. The strategic merger
will make Vitalink the second largest publicly-traded institutional pharmacy
company in the United States with revenues of approximately $400 million.
The first step in the transaction calls for GranCare to spin-off its
skilled nursing operations in a tax-free distribution to shareholders. After
completion of the spin-off of
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the skilled nursing operations, the remaining indebtedness will total
approximately $107 million. Thereafter, pursuant to the merger agreement,
Vitalink will issue 11.6 million shares in exchange for all of the outstanding
shares and stock options of GranCare and will assume the $107 million
indebtedness. The merger valued at approximately $370 million, will be
accounted for under the purchase method of accounting and will be treated as a
tax-free exchange of shares. The skilled nursing operations will continue to be
conducted as a publicly-held company and will retain the well-known GranCare
name. The transaction has been approved by the Board of Directors of each
company, but remains subject to approval of the shareholders of GranCare, Inc.,
regulatory approval and other customary closing conditions. The transaction is
expected to close on or before December 31, 1996.
Following the merger, Vitalink will serve 166,000 beds, or approximately
10% of total skilled nursing facility beds in the United States, through 54
pharmacy locations in 29 states nationwide. The company will continue to have a
high quality payor mix with private pay and Medicare sources contributing two-
thirds of total revenues. It is estimated that on a pro forma basis, the
combined companies will have total assets of $450 million. Pro forma long-term
debt will be approximately $107 million, or 15% of total market capitalization,
based on Vitalink's current $23 per share price.
Following the completion of the merger, Stuart Bainum, Jr. currently
Chairman and Chief Executive Officer of Manor Care, Inc., will serve as Chairman
of Vitalink and
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Gene E. Burleson, currently Chairman and Chief Executive Officer of GranCare,
will serve as Vitalink's Chief Executive Officer. Vitalink's President and
Chief Operating Officer, Donna DeNardo, and Chief Financial Officer, Scott
Macomber, will maintain their respective roles. Arlen Reynolds, currently
President of TeamCare, will become Executive Vice-President of the merged
entity. The Board of Directors will consist of four Vitalink and four TeamCare
board members. Vitalink's headquarters will remain in Naperville, Illinois.
Commenting on the announcement, Stewart Bainum, Jr. of Manor Care said,
"This merger of Vitalink and TeamCare will unlock and enhance the value of both
entities by creating a market-leading institutional pharmacy, well-positioned
for solid internal growth and further acquisitions as the industry continues to
consolidate."
Gene E. Burleson of GranCare stated, "The company will be active in
offering value-added services and providing outcome data through sophisticated
information systems, which are needed to compete in today's managed care market.
Our expanded customer base and geographic presence will allow us to capture a
greater share of the growing subacute nursing and assisted living facilities
markets."
Donna DeNardo, President and Chief Operating Officer, said "We are
delighted with the opportunities this transaction brings to our shareholders,
customers and employees. We expect to realize significant operating savings
through purchasing leverage and the elimination of duplicate functions in our
organizations. This merger
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brings together the best of each company's marketing and operating teams."
Vitalink now provides medications, consulting and infusion services to
approximately 52,000 institutional beds as well as to home infusion patients
through its 23 institutional pharmacies and four regional infusion pharmacies.
Vitalink had net revenues of $141 million and a net income of $13.9 million, or
$0.99 per share, for the year ended May 31, 1996.
TeamCare, a subsidiary of GranCare, provides institutional pharmacy
services to over 114,000 customers in 23 states. TeamCare's net revenues for
the twelve month period ended May 21, 1996 were $220 million.
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