ARV Shareholders Urged to Reject Takeover Bid

Directors of ARV Assisted Living Inc. urged shareholders Monday to reject as “inadequate” a Seattle company’s unsolicited $313.2-million offer to acquire the Orange County retirement home operator.

ARV’s chairman, Howard G. Phanstiel, said in two letters sent Monday to shareholders that Emeritus Corp. is offering “a pig in a poke” and is placing “condition after condition” on its bid, according to documents filed with the Securities and Exchange Commission.

ARV directors decided unanimously that the hostile bid, amounting to $17.50 a share, doesn’t reflect ARV’s “inherent value.” The company also questioned Emeritus’ ability to obtain the financing to complete a deal.

Phanstiel wrote that ARV’s best course is to remain independent.

Emeritus officials could not be reached for comment.

Two weeks ago, Emeritus raised its bid $1 a share after ARV directors rejected the original $16.50-a-share offer, saying the price was too low. The company, instead, redeemed $60 million in notes held by an affiliate of Lazard Freres & Co. in New York for ARV stock. The transaction gave the affiliate a 39% stake in ARV.

An acquisition by Emeritus would make the Seattle company the nation’s largest operator of assisted-living facilities. Emeritus operates 115 retirement homes in 19 states. ARV operates 48 such complexes in 10 states and has six more under construction.

ARV’s stock closed Monday at $15.88 a share, unchanged from Friday’s closing price, in American Stock Exchange trading.