Detention centre operator Broadspectrum has urged shareholders to reject an increased takeover offer from Spanish suitor Ferrovial that values the company at $769 million.
Ferrovial has raised its cash offer price for Broadspectrum to $1.50 per Broadspectrum share, from $1.35 a share, after failing to attract much support for its earlier bid.
Broadspectrum chairman Diane Smith-Gander said the board welcomed the increased offer but it still didn't reflect the true value of the company.
"While the increase in the offer is positive for shareholders, the revised offer continues to undervalue Broadspectrum's shares," she said in a statement.
An independent expert valued the company's shares at between $1.60 and $1.85 cash per share, Ms Smith-Gander said.
The offer is conditional on Ferrovial securing at least 50.01 per cent of Broadspectrum's shares.
Sydney-based Broadspectrum, formerly known as Transfield Services, has repeatedly rebuffed Ferrovial's approach, citing significant undervaluation.
Broadspectrum said it's in a strong financial position and expects 2015/16 underlying earnings in the range of $280 million and $300 million, and more than $300 million for 2016/17.
Ferrovial declared the offer best and final, which means it cannot increase it unless another bidder makes a better offer.
It said the offer remained open for two weeks and the company intends to maintain Broadspectrum's key management and current level of employment in its operations.
"We believe the revised offer is compelling for shareholders, particularly given the full price, certainty of cash and minimal conditionality," Ferrovial's chief executive Santiago Olivares said in a statement.
Ferrovial encouraged shareholders to accept the offer rather than risk the shares returning to their pre-takeover offer price.
Broadspectrum shares gained three cents, or 2.4 per cent, to $1.28.
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