The Reject Shop chairman Bill Stevens has urged shareholders to reject a $78 million takeover bid, accusing the Geminder family of trying to get the retailer "on the cheap".
Mr Stevens says the Allensford Group, which is controlled by rich lister Raphael Geminder's family, was trying to take advantage of The Reject Shop's recent guidance downgrade.
The Reject Shop in October cut its profit guidance by about 40 per cent from $17.7 million to between $10 million and $11 million.
"This offer by Allensford is an attempt to acquire the company on the cheap," Mr Stevens said in the retailer's target statement.
"It is opportunistically timed soon after an earnings downgrade and subsequent institutional sell-off, and before shareholders begin to see the benefits of the significant investment we have made in growth initiatives."
Mr Stevens said the bid failed to take account of the company's conservative gearing, continued profitability and growth potential.
"It is curious that the bidder has focused so extensively on the downside risks of a company they say you should sell off, but they want to acquire," Mr Stevens said.
"Our message to shareholders is clear: don't give Allensford an early Christmas present because we have a clear plan and strategy for our business."
Shares in The Reject Shop fell 0.35 per cent to $2.87 by 1350 AEDT on Monday, still about 18 per cent higher than before the Allensford bid was announced last month.
Allensford said its offer would remove shareholders' exposure to the company's deteriorating financial performance, with an improved December performance necessary to meet its downgraded guidance.
"The TRS share price has bounced back from its recent 'challenging lows' due to the Allensford offer," Allensford director Nick Perkins said in response to The Reject Shop statement.
"If the offer falls away then TRS share price may fall below its recent historic lows, particularly if trading continues to deteriorate."
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