On March 7, 2022, Welltower Inc. (“Old Welltower”) issued a press release announcing that it intends to implement a corporate reorganization into a new holding company structure commonly referred to as an Umbrella Partnership Real Estate Investment Trust, or UPREIT (the “Reorganization”). In the Reorganization, WELL Merger Holdco Inc. (“New Welltower”), a Delaware corporation that currently is a wholly owned subsidiary of Old Welltower, will become the publicly traded parent company of Old Welltower and its subsidiaries and will inherit the name “Welltower Inc.” Old Welltower, the current real estate investment trust, will exist as a wholly owned subsidiary of New Welltower initially called “Welltower OP Inc.” and, subject to approval of New Welltower’s shareholders, convert to a Delaware limited liability company (the “LLC Conversion”) called “Welltower OP LLC.”
New Welltower will replace Old Welltower as the public holding company listed on the New York Stock Exchange (the “NYSE”) and, as of the Effective Time (as defined below), New Welltower common stock will trade on the NYSE on an uninterrupted basis under the existing symbol “WELL” and will retain the CUSIP number of 95040Q104. The NYSE ticker symbols of Old Welltower’s 4.800% Notes due 2028 (CUSIP number 95040QAA2) and $4.500% Notes due 2034 (CUSIP number 95040QAB0) will change, respectively, to WELL/28 and WELL/34 and these notes will retain their existing CUSIP numbers.
Merger
The first step of the Reorganization will be effectuated pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated March 7, 2022, among Old Welltower, New Welltower and WELL Merger Holdco Sub Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of New Welltower. Pursuant to the Merger Agreement, Merger Sub will merge with and into Old Welltower pursuant to Section 251(g) of the General Corporation Law of the State of Delaware (the “DGCL”), with Old Welltower continuing as the surviving corporation and a wholly owned subsidiary of New Welltower (the “Merger”). The Merger will be conducted pursuant to Section 251(g) of the DGCL, which provides for the formation of a holding company (i.e., New Welltower) without a vote of the shareholders of the constituent corporation (i.e., Old Welltower). The Merger is expected to be effective as of April 1, 2022 (the “Effective Time”).
In accordance with the Merger Agreement, at the Effective Time, each issued and outstanding share of Old Welltower common stock immediately prior to the Effective Time will be converted into an issued and outstanding share of New Welltower common stock, having the same designations, rights, powers and preferences and the qualifications, limitations and restrictions as the corresponding share of Old Welltower common stock being converted. Accordingly, upon consummation of the Merger, Old Welltower’s shareholders immediately prior to the consummation of the Merger will become shareholders of New Welltower. The conversion of stock will occur automatically without an exchange of stock certificates at the Effective Time.
The consolidated assets and liabilities of New Welltower immediately following the Merger will be identical to the consolidated assets and liabilities of Old Welltower immediately prior to the Merger. New Welltower will not hold any assets directly other than certain de minimis assets that may be held for certain administrative functions. None of the properties owned by Old Welltower or its subsidiaries or any interests therein have been or will be transferred as part of the Reorganization. All material indebtedness of Old Welltower immediately prior to the Merger is expected to be indebtedness of Old Welltower after the Merger.
LLC Conversion
An UPREIT structure allows owners of appreciated property to contribute such property to an “operating partnership” in exchange for partnership interests therein. Partnership interests in Welltower OP LLC will generally entitle its holders to receive the same distributions as holders of New Welltower common stock, and the holders of such interests will generally be entitled to exchange the partnership interests for cash or common stock, at New Welltower’s option. In order for Old Welltower to function as the operating partnership in the UPREIT structure it must be converted from a Delaware corporation to a limited liability company.
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