COSTA MESA — ARV Assisted Living Inc. lost a bid to fend off Emeritus Corp.'s $313-million takeover offer while litigation over the proposed acquisition is heard in California's courts, officials of Seattle-based Emeritus said Wednesday.
A federal judge in California has stayed ARV's lawsuit to bar Emeritus' $17.50-a-share tender offer while a state judge decides, among other things, whether ARV's so-called poison pill provision can be used to block the offer.
A poison pill is designed to make a hostile takeover prohibitively expensive by allowing shareholders, other than the hostile suitor, to buy the company's stock at discounted prices. ARV's poison pill is activated once a suitor buys more than 10% of the company's stock, Emeritus officials said.
Emeritus now owns 1.08 million shares, or 6.8% of ARV's shares outstanding. Last week, ARV's board rejected its offer to buy the shares it doesn't already own.
Costa Mesa-based ARV has said it prefers an agreement with an affiliate of New York investment house Lazard Freres & Co., which owns about 39% of ARV.