Capital Senior Living Corp. (NYSE:CSU) has announced that a Special Committee of its Board of Directors has engaged Banc of America Securities, part of Bank of America (NYSE: BAC), as its financial advisor. B of A will assist in actively exploring and considering what it calls "a range of strategic alternatives" as it is prominent in both healthcare and real estate.
Capital Senior is among the larger operators of senior living communities in the U.S. and it is one we have referred to as one of the "entrance stages" or even the "training wheels" stage of the senior care field. That pertains to the stage of the industry it serves as the majority part of its business rather than an emerging stage company.
The company formed a Special Committee back in March and this one has been thought of as a potential takeout candidate or merger candidate as a result. The company even states its goal is to maximize shareholder value and it believes it is well-positioned to benefit from attractive demographics and strong industry fundamentals.
We just featured Capital Senior Living two weeks ago in our weekly "10 STOCKS UNDER $10" newsletter as "one we think you can hang out in for a couple weeks since we are nearly 60-days into its review of whether or not it can be bought. But after the next week or two if no word has come, then take you gain or your loss and we’ll look elsewhere."
Shares had closed at $8.36 before that and ran up to $8.95 before todays $8.39 close. Shares are up about 2.5% in after-hours trading at $8.60. With a $223 million market cap, even a credit crunch and even tighter credit standards allow this one to fall into the "easy realm" of acquisitions for any larger group. Th real trick will be in making it more profitable.
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Jon C. Ogg
May 29, 2008
Jon Ogg produces and edits the SPECIAL SITUATIONS newsletter; he does not own securities in the companies he covers.