New Capital
Contrarian, Deep Value, long/short equity, special situations

Five Star Quality Care - Special Situation Of Competing Tender Offers - At Least 20% Upside

This is an interesting special situation whereby two strategic investors and current shareholders have announced competing tender offers for 20% of the outstanding shares. Five Star Quality Care (NYSE:FVE) currently trades below the tender prices and thus I see it as a great opportunity to profit from the bidding war. The downside is well protected by the assets on the balance sheet.

Background:

On Oct 3, 2016, ABP Acquisition (controlled by the Portnoy family, owner of 8.6% of FVE shares through Senior Housing Properties Trust) commenced a tender offer for 10m shares at $3 per share. This represented 20% of the shares outstanding. Right after the announcement, the price jumped to $2.7, leaving only a minimal

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