Retirement village Aevum Limited (ASX: AVE) seems to be close to hoisting up the white flag when its board of directors reluctantly recommended last night investors to accept offer from Stockland Corporation Limited (ASX: SGP).

The directors decided over a six-hour meeting that the $320 million offer was not necessarily fair, but it was reasonable. In a letter to shareholders, Aevum chairman Graham Lenzner wrote that “After careful consideration . . . your board unanimously recommends that shareholders with a short- to medium-term investment horizon accept Stockland's revised offer in the absence of a superior proposal.”

However, Lenzner urged shareholders with a longer-term view and “with a focus on seeking to realise the full underlying value of Aevum” to reject the bid.

Stockland's takeover bid was inching up from 15.94 percent to 16.1 percent last night. Aevum shares closed unchanged at $1.805.

Aevum's independent expert, Lonergan Edwards and Associates, had concluded the revised offer was unfair, but was reasonable for shareholders with short to medium term investment horizons. Its updated valuation range for Aevum was $1.91 to $2.22 a share.

Stockland managing director Matthew Quinn expects gearing to increase two percent to around 20 percent his company acquires all of Aevum at the increased offer value. The transaction would remain earnings-per-share neutral for Stockland in the 2011 financial year and about two percent accretive in the 2012 financial year.