Broadspectrum has suggested that Spanish infrastructure giant Ferrovial has undervalued the detention centre operator with its $715 million takeover bid.
The Australian firm said on Tuesday it will make a formal recommendation to shareholders in January on whether they should accept the $1.35 per share all-cash offer.
But it has already pointed out the offer is some way below recent values despite it representing a premium on the security's current price.
At 1330 AEDT, Broadspectrum shares were down 5.25 cents, or 4.18 per cent, at $1.203.
Broadspectrum shares were trading at 85 cents before Monday's announcement by Ferrovial that it had returned for a second tilt at the company it first tried to buy a year ago.
That second offer sent the shares soaring by almost 50 per cent on Monday.
Yet Broadspectrum noted that the security was trading at $1.60 as recently as June and pointed out that the company had since met its upgraded FY15 guidance.
Ferrovial was thwarted in an attempt to buy the firm then known as Transfield a year ago when the board knocked back a $2.00 per share offer.
Broadspectrum's share price has halved between then and Monday's announcement of a second bid amid protests over its involvement in the Australian government's offshore detention centres in Nauru and Manus Island.
Some investors sold their shares because of concerns over alleged human rights abuses.
Broadspectrum said it would take up to 15 days to assess the bidder's statement, which it expects to be sent to shareholders between December 21 and January 4.
Ferrovial has said shareholders should remember there was no dividend paid in FY15 because of Broadspectrum's high debt and that the company's future earnings were heavily reliant on it retaining the detention centre contract.
Broadspectrum's five-year contract with the Department of Immigration and Border Protection expired in October 2015. It was extended for four months from November and the firm is the preferred bidder for a new five-year contract.
The then-Transfield in August reported an 11.6 per cent drop in full year profit to $48.6 million, largely because of costs relating to legacy contracts and the writing off of debt.
It said it expected to run "clean" in FY16 with underlying earnings similar to its $265.3 million for 2014/15, which were up 22.4 per cent.
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