A hedge fund has called for the sale of Sunrise Senior Living, citing problems with management and accounting at the large U.S. owner of assisted living and nursing homes.
In a letter to Sunrise released Thursday, Millennium Partners called on the board to sell, merge or restructure the McLean, Virginia-based company, or to recruit new management. The hedge fund said it owns 1.3 million, or 2.5%, of Sunrise's shares.
Millennium said it sent the letter on May 31, two days after Sunrise said the U.S. Securities and Exchange Commission opened a formal probe into its accounting, insider stock sales and the timing of stock options grants. The company has said it is cooperating with the probe. Sunrise is also restating several years of financial results.
In its letter, New York-based Millennium said Sunrise's business value is "north of $54 per share," at least 30% higher than its Wednesday closing price of $41.52. Sunrise's market value is roughly $2 billion.
"This company, with this management, does not belong as a participant in the public securities markets," Millennium said in its letter. "This is an appropriate time to sell the company, either to another entity or in a private transaction."
Millennium said it does not want to buy Sunrise itself.
Sunrise did not immediately return calls seeking comment. Sunrise shares rose $1.38, or 3.3%, to $42.90 in pre-market trading.
Hedge funds are becoming more aggressive in pushing for change at companies they believe are heading in the wrong direction. Carl Icahn, William Ackman and Barry Rosenstein are among investors to pressure such companies as Kerr-McGee Corp. and McDonald's Corp. to pursue spin-offs or sales.
Another Sunrise shareholder, the Service Employees International Union, has called on the company to replace five directors, saying they are too close to management. The union did not immediately return a call on Thursday for comment.
Millennium was founded in 1989 by Israel Englander and others, and oversees about $9 billion of assets.
Sunrise employs about 39,000 people, and said that as of March 31 it operated 444 facilities in the United States, Canada, Germany and Britain.
In early May, Sunrise said it fired Chief Financial Officer Bradley Rush following an internal review of insider stock sales and accounting issues.