Metlifecare plans to take over Vision Senior Living and Private Life Care by issuing shares worth about $113 million, making it bigger than Ryman Healthcare, when ranked by net tangible assets.
Metlifecare's shares fell 14 cents to $2.06 each on Monday.
Chief executive Alan Edwards says the planned takeovers will give it more sites to build retirement villages and offer a wide range of aged-care services for rest home residents, and save overheads.
At the same time, Metlifecare's largest shareholder, Retirement Villages, plans to sell down its stake to below 50% , but promises not to go below 35 percent in the first year.
Forsyth Barr research director Jeremy Simpson, who analyses Ryman Healthcare, says demographics driving population changes mean an increasingly larger proportion of the population will demand more facilities. The first wave of people in the "baby-boomer" population bulge has just passed retirement age.
Mr Simpson says the propose deal combines expertise from all three companies and may create efficiencies.
Mr Edwards said the planned takeover of two rivals will "rebalance" Metlifecare's own portfolio. Assets and operations of the three companies complement each other.
"Metlifecare is a very strong operator, and has a full continuum of care; Vision Senior living has a reputation as a strong developer - they have developed their entire portfolio over the past 10 years," he said.
"We put those together with Metlifecare and Private Life Care's strong, reliable cashflows, and the end result is a rebalanced portfolio within Metlifecare, with a stronger focus on future development".