ARV Takes Steps to Guard Against Lazard Takeover

ARV Assisted Living Inc. set in place a “poison pill” plan, saying Wednesday that it wants to prevent a possible hostile takeover by a Lazard Freres & Co. affiliate that already owns 48% of the company.

Costa Mesa-based ARV, a developer of housing for the elderly, said it took the action before the expiration of an agreement that prevents the Lazard Freres unit from boosting its take in ARV. The agreement expires Jan. 11.

The relationship between the two soured when Lazard bid in April to buy ARV competitor Atria Communities Inc. A California court in August dismissed an ARV lawsuit that sought to prevent that acquisition and also accused Lazard of fraud.

“Actions taken by the board today guard against open market accumulations and other tactics to gain control of the company without all stockholders receiving fair value,” ARV Chairman and Chief Executive Howard Phanstiel said in a statement.

Lazard spokesman Owen Blicksilver declined to comment on ARV’s move. The provisions expand a previously passed poison-pill defense to include Lazard, which had been granted an exception from its terms.

ARV is concerned that Lazard will try to gain control of the company by buying shares in the open market at a time when its stock is trading below its roughly $6.50-a-share book value.

On Wednesday, the stock fell 25 cents to $5.75 a share. Shares have tumbled 64% this year amid concern about ARV’s relationship with Lazard Freres, volatility in the overall stock market and worries about prospects for growth in the assisted-living industry. These companies build and operate housing with special services to help the elderly, especially those needing limited medical assistance.

Future prospects have attracted investment banks such as Lazard and Goldman, Sachs & Co. and hotel chains such as Marriott Corp.

ARV said it took the measures Wednesday because its stock price had declined to a point where its standstill agreement with Lazard would expire. When the market value of Lazard’s stake in ARV fell below $25 million on Oct. 12, it triggered an end to the agreement 90 days later, ARV said.

ARV said it amended its bylaws to eliminate the right of shareholders owning a majority of common stock to call a special shareholders meeting.

The board also boosted the number of directors to 10 from nine, adding ARV President and Chief Operating Officer Douglas Pasquale as a member.