Why American Realty Capital Healthcare Trust, Inc. Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of American Realty Capital Healthcare Trust, (NASDAQ: HCT  ) (or ARC) are trading about 10% higher today after news broke this morning that the giant real-estate investment trust (REIT) Ventas (NYSE: VTR  ) would purchase ARC for $2.6 billion in cash and stock.

So what: Ventas made an offer of $11.33 per share of ARC, and ARC shareholders can also elect to swap their shares for 0.1688 shares of Ventas. The deal will only pay out 10% cash at most, with the rest being swapped shares -- at current prices, ARC shareholders will get roughly $10.97 worth of Ventas shares, as the REIT lost nearly 3% of its value on the news. That's still a tiny premium over ARC's current share price of $10.92, but it's nothing to bother arbitraging at the moment.

Now what: ARC has been publicly traded for less than three months now, so it's not as though investors had much time to get used to it as a long-term holding. However, swapping those shares for Ventas shares seems like a losing proposition right now -- Ventas offers a lower dividend yield than ARC and a weak past-year performance, although its five-year chart shows a solid 160% gain with dividends reinvested. You may want to consider taking your gains and finding another high-yielder instead of sticking with Ventas after the deal concludes.

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