Engineering and maintenance firm Downer EDI says it has lifted its interest in takeover target Spotless Group to nearly 30 per cent as Spotless continues to urge its shareholders to reject Downer's offer.
Downer on Thursday said it now had an interest of 29.598 per cent in facilities services provider Spotless.
It is offering $1.15 for each Spotless share, valuing Spotless at $1.3 billion.
Downer intends to waive the defeating conditions to its offer and introduce accelerated payment terms if it achieves an interest of at least 50 per cent in Spotless by June 16 and if no defeating condition has been breached.
Spotless's board has told shareholders they will be better off if they keep their shares as the company resets its strategy to boost earnings growth.
On Thursday, Spotless said it was showing positive momentum and again recommended that shareholders reject Downer's current offer.
It said it had reduced its operational complexity by selling a bundle of about 250 small cleaning contracts in New Zealand, and had started delivering services under a major contract at the new Royal Adelaide Hospital.
Furthermore, Spotless had improved its contract win and renewal rates and had extended its debt maturities.
"As we have consistently maintained, Spotless is at an inflection point, and today's announcement is further evidence that the strategy reset is well on track and there is strong positive momentum in the business," Spotless chairman Garry Hounsell said.
"The board and management team have maintained their strong focus on delivering results, and we continue to maintain our belief that Spotless can create more value over the medium term as an independent company."
Shares in Spotless were up 0.22 at $1.1425 at 1252 AEST.
Downer EDI was 3.73 per cent lower at $6.065.
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