Detention centre operator Broadspectrum says a $692 million takeover offer from Spanish company Ferrovial undervalues Broadspectrum.
Broadspectrum, formerly known as Transfield Services, also said that at this stage Broadspectrum shareholders should do nothing about the Ferrovial offer.
Ferrovial has offered $1.35 for each Broadspectrum share.
Ferrovial put a takeover proposal to Broadspectrum a year ago at $2.00 per share, which the Broadspectrum board rejected.
"The offer compares poorly to the trading prices of Broadspectrum over the past 12 months," Broadspectrum said in a letter to shareholders on Tuesday.
"While Ferrovial has cited some short-term comparisons in its bidder's statement, it has not shown how the offer compares against the trading prices of Broadspectrum shares over a broader period."
Broadspectrum says, for example, that Ferrovial's offer is at a 15.6 per cent discount to Broadspectrum's share price of $1.60 on June 5, 2015 - six months before the offer was made.
Ferrovial's offer price is also less than Broadspectrum's average share price over the last 12 months of $1.36.
Broadspectrum said the Ferrovial offer was opportunistically timed to take advantage of short-term weakness in Broadspectrum's share price.
The maintenance and asset management firm noted that Ferrovial had not had any access to any confidential Broadspectrum information since December 2014.
Broadspectrum said that its performance had continued to improve over the last 12 months, and the outlook was positive.
The company had work in hand of over $10 billion, and on Monday the company had upgraded its financial guidance for the 2016 financial year.
Broadspectrum is the federal government's preferred bidder to operate the Nauru and Manus Island detention centres for another five years, which it has been operating since 2013.
Broadspectrum also said that Ferrovial's offer was highly conditional and that some of the 25 conditions were contradictory.
Broadspectrum expects to make a formal, detailed response to Ferrovial's offer in its target's statement to be released in January.
Broadspectrum shares were 1.5 cents higher at $1.33.
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