Abbey Healthcare Ups Offer for Boston Firm : Acquisitions: The Costa Mesa company tells Lifetime Corp. that refusing $261 million would be ‘irresponsible.’

In its bid to create the nation’s largest home-health company, Abbey Healthcare Group Inc. has sweetened its offer to buy a Boston competitor, upping its original $220-million offer by another $41 million and saying that further rebuffs would be “irresponsible.”

“Your shareholders are not fools,” Abbey Chief Executive Timothy Aitken said in a letter sent Friday to the board of directors of Lifetime Corp. “We believe that Lifetime shareholders will find this price . . . extremely attractive.”

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Abbey has sought to buy Lifetime for the past eight months, and last week offered Lifetime shareholders $23.50 a share in cash and stock. That offer amounted to $220 million.

Lifetime staunchly refused the offer, saying that the price was too low and that it intends to remain independent.

But Aitken said in a Friday telephone interview that the new $27.50-a-share offer--amounting to $261 million--was fair and may be viewed favorably by Lifetime executives, board members and shareholders.

“This price does begin to give a very different weight to the whole situation,” Aitken said. “I don’t believe that the outside directors can conceivably walk away.”

Indeed, the growing publicity over the takeover attempt has caused Lifetime’s stock to rebound recently. Lifetime shares had fallen from a high of $32.375 a share in February, 1992, to a low of $16.75 on March 12 this year.

But news of the buyout offer has fueled a strong rebound. Lifetime stock closed Friday at $23.50 a share, up $1.375 on the New York Stock Exchange.

By comparison, Abbey stock, traded on the NASDAQ market, has climbed from $12.50 a share in February, 1992, to $19.50 a share on March 12. But Abbey stock has crept down on the buyout offer. It dropped $1.125 a share Friday, closing at $18.25.

As investors speculated on the possible acquisition, Lifetime Chairman Anthony Reeves indicated a new willingness to negotiate, saying that the board of directors would meet “as expediently as possible.”

Reeves maintained, however, that a merger with Abbey is unnecessary to ensure his company’s financial future. “It’s perfectly obvious it’s something that Abbey needs and Lifetime doesn’t,” he said.

But Reeves stressed that the six-member board, of which he is the only executive member, won’t make a decision until it seeks advice from legal and financial experts.

And in a written response to Aitken’s letter, Reeves added: “The truly irresponsible action, to use your term, would be to take actions that deny our shareholders the benefits of their patient investment in the company.”

Margherita Karo, an analyst with New York investment bank Gruntal & Co., wondered about Abbey’s determination, saying that Lifetime has performed well on its own, growing to an $885-million-a-year company.

“I can’t imagine why Lifetime needs” the Abbey takeover, Karo said. “I mean, why couldn’t they expand themselves?”

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Neither Reeves nor Karo commented on what they would consider to be a fair price for Lifetime.

Abbey officials said that an Abbey takeover would result in lowering Lifetime’s administrative costs and providing higher profits.

Aitken said that Abbey is far more efficient, with annual operating margins twice those of Lifetime. Abbey had revenue of $248 million in 1992 and a profit of $10.4 million, compared to Lifetime’s net profit of $5.2 million.

Lifetime blames an extraordinary charge of about $12 million, which reduced its net income last year.

At least one large institutional investor, who spoke on condition of anonymity, said he welcomed Aitken’s overtures, adding that Lifetime’s stock had not performed well in the past year. A takeover would create a company with more than $1 billion in revenue and 560 branches nationwide.

“This makes a lot of sense,” he said. “Aitken is a very aggressive and effective researcher and businessman.”