Banknote printer De La Rue has rejected an improved 935p per share bid proposal from French suitor Oberthur Technologies, saying it still significantly undervalued the group.
De La Rue, which has been hit by problems in its key Indian market, said in a statement it had received indications that Oberthur would increase the proposed offer to 935p, after it rejected a 905p offer in December.
"The board has carefully considered Oberthur's revised proposal and believes that it continues to significantly undervalue the company and its prospects," said chairman Nicholas Brookes.
"The board therefore unanimously rejected this latest approach."
Evolution Securities analyst Adrian Kearsey said the increased offer was an improvement but he thought the final price would need to be over £10.
"There's still a material gap so we're not surprised that 935p has been rejected," he said. "The question is whether that was just testing the ground for the resolve of the company.
"It's got to be over £10 pounds, £10.20 or £10.40. We've got an IMS potentially coming out this week from De La Rue and I think a strong IMS would probably reduce the chance of a successful bid happening."
An offer of 935p would value the group at around £925m. De La Rue's shares were trading down 2.13 per cent at 802p by Monday afternoon.
The share price dropped by around 30 per cent when the company first reported production problems at its plant in July last year.
It then warned in November that the difficulties could lead to the loss of a top customer, which sources have said was the Reserve Bank of India.
The shares have recovered since Oberthur made its initial bid in December but are still trading well below the offer price as doubts remain over De La Rue's future work in India and whether a deal will happen.
City A.M. Reporter