ARV Rejects Emeritus Offer as ‘Unattractive’

ARV Assisted Living Inc. said Tuesday it has rejected a buyout bid from Emeritus Corp., preferring instead a previous offer from a major Wall Street investor to buy half the Orange County company.

ARV said its board decided that the unsolicited offer was “unattractive” because the price was too low, and there were too many uncertainties attached to the deal.

“We believe we will deliver more value per share for our shareholders over time,” ARV Director John J. Rydzewski said Tuesday. “And we don’t want them to be disadvantaged by accepting that offer.”

Seattle-based Emeritus on Monday offered to buy ARV for $210 million, as well as assuming $91 million in ARV debt. Emeritus President Raymond Brandstrom said the company is not planning to sweeten its bid, which amounts to $16.50 a share.

“We think we have made a very fair offer that provides liquidity for the shareholders,” he said. “And we’re just not inclined to bid against ourselves at this time.”

In July, an affiliate of Lazard Freres Real Estate Investors LLC announced plans to buy as much as 49.9% of ARV’s common stock for $14 per share, or up to $135 million. According to regulatory filings, Lazard has already bought a third of that amount.

ARV operates 49 assisted-living communities, which help the elderly with activities such as eating, bathing and taking medications. The company, which went public in October 1995, is one of the largest in the industry.

Lazard spokesman Owen Blicksilver said Tuesday the company is glad the deal, which must be approved by ARV shareholders, is still on track.

ARV shares closed Tuesday in Nasdaq trading at $16, off 88 cents. Emeritus closed at $15.75, down 25 cents, on the American Stock Exchange.

Rydzewski said the price of ARV stock has been climbing since the deal with Lazard was announced in July, and he expects the price to keep moving up.

With a wave of consolidation building in the industry, ARV has been positioning itself for survival.

ARV officials have said the Lazard deal should enable the company to buy and build more properties.

Earlier this month, Lazard Freres and ARV announced they plan to team ARV with Kapson Senior Quarters Corp., the largest operator of assisted-living facilities in the Northeast. A Lazard Freres affiliate is planning to purchase almost all of Kapson’s stock.

Lazard’s proposal to acquire nearly half of ARV mirrors moves made by other large investors, who have bought stakes in companies that run assisted living centers and nursing homes.

Brandstrom said Tuesday he was disappointed in ARV’s quick rejection.

“I am surprised at the speed at which they responded,” he said. “It indicates to me that there was not a lot of consideration given.”

Emeritus has said it began buying ARV stock on the open market last spring and now owns more than 5% of the company.