The directors of nursing home operator Advocat formally responded to the publicly announced buyout bid from Georgia-based Covington Health Group by saying the offer doesn't take into account the company's investment in growth and plans to add to its properties. In addition, they say, the market is undervaluing the senior living sector as a whole, so this really isn't the right time to seriously consider a sale.

But the biggest sign that Covington's bid may not go anywhere soon: The board's largest shareholders, Wallace Olson and Chad McCurdy's Marlin Capital, have closed ranks. Combined, the two own more than 29 percent of Advocat's stock (Ticker: AVCA).

As noted above, two of our significant shareholders met with you solely in their role as shareholders of the Company. Based on conversations with those shareholders following that meeting, the Board believes that those shareholders are not interested in selling their shares at the proposed price. While we acknowledge that those shareholders do not speak for all shareholders, we believe they serve as useful proxies for the views of many of our shareholders, and the significance of their ownership position has bearing on the likelihood that your proposal could be successfully concluded.