Abbey Healthcare Withdraws Offer, Launches Proxy Fight : Power play: Costa Mesa firm rescinds $261-million bid for Lifetime Corp. and seeks to take over board.

COSTA MESA — After withdrawing a $261-million bid to buy a competitor, Abbey Healthcare Group Inc. has launched a proxy fight to take over the board of directors of Lifetime Corp.

The move, quickly criticized by Lifetime officials, was revealed Sunday. Timothy M. Aitken, chairman of Abbey, announced that the company, based in Costa Mesa, will nominate a director for Boston-based Lifetime’s board of directors in opposition to current Lifetime Chairman Anthony M. Reeves.

Abbey, a manufacturer and supplier of home medical-care products, said it will support Leonard Green, a private investor and director of OrNda Healthcorp in Nashville, Tenn., to run against Reeves at Lifetime’s annual meeting, scheduled for May 19 in Boston.

Lifetime, a provider of home medical services, has rejected two takeover offers from Abbey since March. On April 7, after Lifetime’s board rejected the second offer and refused to meet with Abbey representatives, Abbey withdrew its bid of $27.50 a share.

Lifetime’s stock gained $2.375 a share Monday to close at $24 in NASDAQ trading. Abbey fell 37.5 cents a share to close at $17.625.

Aitken said: “Mr. Reeves, along with the rest of the Lifetime’s senior management and board, has rebuffed or ignored our attempts to negotiate a business combination with Abbey, Lifetime’s most logical strategic buyer.”

Lifetime’s response on Monday: “Mr. Aitken’s action is another example of his unwillingness to offer Lifetime shareholders a full and fair price for their company.”

Lifetime, the nation’s largest home health care concern, has maintained that Abbey’s offer does not represent “a fully financed offer.” Aitken, however, says Lifetime’s board has not asked to see the financing sources for the offer.

Analysts say Aitken has doggedly pursued Lifetime because of synergies that he supposes could come from having a home health care services company combined with a home medical products company.

“Tim is a believer in one-stop shopping, offering every aspect of health care to all people,” said Tom Schreur, an analyst at investment bank Kidder Peabody & Co. in New York. “I think he has a chance with this proxy fight if he can drum up Lifetime’s shareholders.”

Lifetime said Aitken, who at the time of the first merger offer held about 1% of the outstanding shares of Lifetime, sold some of his stock recently for a large profit.

Aitken nominated only one candidate for a six-member board, Lifetime said, five of whom are considered independent directors.

Lifetime said again Monday that it will explore all alternatives to maximize shareholder value, including putting the company up for sale--given a “real, fully financed offer.”

Lifetime, with revenue of $886 million last year, is more than three times as big as Abbey, which had 1992 revenue of $249 million. Despite its smaller size, Abbey posted a bigger profit for the year: $10.5 million compared to Lifetime’s $5.2 million.

Aitken has said that Abbey is well positioned to buy Lifetime and that, in three separate letters to Lifetime’s board, Abbey had stated who its financial backers are.