The value of micro cap stock for Sun Healthcare Group Inc. (NASDAQ:SUNH) rose during trading on Thursday, as news of the company being purchased by Genesis Healthcare positively affected investor sentiment.
According to a release, Genesis will acquire the company for approximately $275 million, or roughly $8.50 per share. The move is seen as an attempt by the two firms to consolidate resources to promote further growth.
"The combined entity will have broad geographic reach and the scale necessary to remain competitive in the post-acute sector," said the company's chief executive William A. Mathies. "On a combined basis, the two companies generated roughly $4 billion in revenue in 2011 and will have more than 420 facilities and 75,000 employees."
Reuters reported that the deal was also a result of the mounting federal debt, which has led the U.S. government to cut spending on healthcare by limiting payments to providers such as Sun Healthcare and Genesis.
This resulted in a rise for the company's stock, with shares increasing $2.21 to $8.35 at 12:31 p.m., up 36.1 percent.