The board of Spotless Group has recommended investors knock back the shock $1.2 billion bid from services company Downer EDI labelling it as "opportunistic, hostile, highly conditional' and unlikely to proceed.
In a statement to the ASX on Monday, ahead of a formal target's statement to be issued later this week, the board played up its own "reset" strategy but also admitted that talks with other potential bidders had faltered.
After Downer's bid - at $1.15 a share - surfaced in late March, Spotless and its advisers had engaged with several parties about a competing deal including "detailed discussions with a global facilities services company", the statement said.
"The discussions with that party included exploring a potential merger transaction valuing Spotless at a superior value than the Downer offer," the statement said.
"These discussions ended on April 22, when the parties could not reach agreement on the terms of the transaction."
Notwithstanding the lack of a competing offer Spotless is urging investors to back the company's existing turn around strategy.
"The Spotless board is unwavering in its belief in the fundamental strengths of the business," chairman Garry Hounsell said
"These include a blue-chip customer base and a strong portfolio of long term government, health, defence and PPP contracts.
"We have assessed the Downer offer in the context of our announced strategy reset which is expected to be material driver of growth and is already delivering results."
The announcement follows an unsuccessful attempt by Spotless to have the bid knocked off at the Takeovers Panel over complaints about "misleading" statements.
"Your directors have been and continue to focus on exploring all options to maximise value to shareholders," Mr Hounsell said.
"If we remain an independent listed entity, the directors are confident that the fundamental strengths of Spotless' core business, together with management's execution strategy reset will deliver greater value to Spotless' shareholders than the Downer offer in the medium term."
Downer has offered $1.15 per share for Spotless a significant premium to its pre-bid price.
Spotless said in its statement that New York hedge fund Coltrane Asset Management, which holds 10.37 per cent of Spotless, did not support the deal and that was another reason to reject the proposal.
The statement did note thought that Coltrane had not made a "final decision" and reserved its rights to take any action it felt was appropriate.
Downer's shares were down 0.62 per cent to $5.60 in early trade, Spotless shares were also steady at $1.10 down 1 cent.