UPDATE: HCP Ordered To Pay Ventas $101 Million; Plans To Appeal
05 September 2009 - 6:32AM
Dow Jones News
A jury ordered real-estate investment trust HCP Inc. (HCP) to
pay Ventas Inc. (VTR) about $101 million in compensatory damages in
a verdict that the company interfered with Ventas' initial attempt
to acquire Sunrise Senior Living REIT.
Chicago-based Ventas had originally sought $300 million in
compensatory damages as well as punitive damages, according to
HCP.
Most analysts had been expecting Ventas to win the suit but the
amount of damages HCP would have to pay remained an outstanding
question. Oppenheimer & Co. analyst Mark Biffert said Ventas
may have been surprised with the amount of compensatory damages
awarded.
"I think Ventas was expecting a much larger number," said
Biffert.
In a statement, Ventas said it was pleased with the jury's
recognition of HCP's "significantly wrongful actions."
"The damages awarded by the jury, at least in part, will help
compensate Ventas for the injury caused by HCP," said Ventas
Chairman, President and Chief Executive Debra Cafaro.
Still, Biffert said the impact on both HCP and Ventas is
minimal, due to the size of the companies. HCP has an approximate
market capitalization of roughly $7.1 billion and Ventas' market
capitalization is about $5.6 billion.
Ventas, a REIT that owns acute-care hospitals and personal-care
facilities, in July said a U.S. District Court in Kentucky ruled
that it could present its case against HCP in a trial that
commenced in August. At the time, the court denied a summary
judgment motion by HCP, which requested the court toss Ventas'
claim.
Ventas and Sunrise agreed to an amended merger in April 2007 for
$1.97 billion, which included a 10% price increase from an earlier
agreement in January of that year. Ventas entered the Canadian
senior housing market with the acquisition.
Ventas filed a complaint in 2007 alleging that HCP interfered
with its purchase agreement by making misleading statements related
to the bid and alleged HCP's interference in the deal caused it to
pay more money for the real investment trust. HCP said it plans to
appeal the verdict. A representative from HCP declined to provide
additional comments.
HCP's shares were down 0.7% to $26.44 in recent trading, while
Ventas' stock rose 0.6% to $36.82.
-Veronica Dagher, 212-416-2261; veronica.dagher@dowjones.com
(John Kell contributed to this report)